Proprietorship registration with GST registration and MSME registration along with business bank account opening and LEDGERS accounting software for providing estimates, invoices, tracking purchases, filing GST returns and generating GST eWay bill. Inclusive of government fee and taxes.
What is a proprietorship?
The concept of One Person Company in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in an OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership (LLP). Similar to a Private Limited Company, a One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.
Though a One Person Company allows a lone Entrepreneur to operate a corporate entity with limited liability protection, an OPC does have a few limitations. For instance, every One Person Company (OPC) must nominate a nominee Director in the MOA and AOA of the Company – who will become the owner of the OPC in case the sole Director is disabled. Also, a One Person Company must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year like all types of Companies. Th
Who is a proprietor?
The owner of a sole proprietorship business in India is called a proprietor. It cannot be a corporate or legal entity. The proprietor and the proprietorship are considered to be the same entity legally.
The PAN and other documents of the proprietor are the basis for obtaining all other business registrations and licenses. In case of any issues of liability in the business, the proprietor is held personally liable for it.
Each proprietorship differs in terms of the functions, clientele and the mode of operations. Hence, a couple of the registrations mentioned below will be applicable.
- MSME registration– MSME or Udyog Aadhaar registration can be obtained in the name of the business to establish that the sole proprietorship is registered with the Ministry of Micro, Small and Medium Enterprises.
- TAN Registration- TAN registration must be obtained for the proprietor from the income tax department if the proprietor is making salary payments wherein TDS deduction is required.
- GST registration– GST registration must be obtained if the proprietor is selling goods or services that cross the GST turnover threshold limit for registration. In most states, GST registration is required for service providers having annual revenue of more than Rs.20 lakhs and in case of traders – annual revenue of more than Rs.40 lakhs.
- Import Export code– Import Export Code or IE code can be obtained from the DGFT in the name of the business – in case of a proprietorship business undertaking export and/or import of goods into India.
- FSSAI registration– In case the proprietorship is involved in the selling of food products or handling of food products, FSSAI registration must be obtained from the Food Safety and Standard Authority of India in the name of the proprietor.
- Current account– A current account can be opened for a sole proprietorship through IndiaFilings from various banks in India. IndiaFilings offers exclusive partnerships through which zero-balance current accounts can be opened. It is recommended that GST registration be obtained for the same.
- Ease to setup- The entrepreneur can start operations and receive payments from clients as no registrations are required to start a proprietorship.
- Ease of compliance- The other advantage of a Proprietorship is that it requires no additional compliance in most cases. The PAN of the proprietor and proprietorship are one and the same. Hence in most cases, only income tax return in Form ITR-3 must be filed every year.
- Ease of dissolution- The proprietor does not have to particularly wind up the company incase he wants to cease operations. This saves a lot of time and effort.
- Liability protection– A sole proprietorship does not provide the proprietor with limited liability protection. So the proprietor would be held personally liable in case of any loss or liability.
- Transferability- Any license or registration obtained in the name of the proprietorship cannot be transferred to any other person or entity.
- Lifespan- The existence of the sole proprietorship is tied to the proprietor hence it would cease to exist with the proprietor.
- Fundraising- A proprietorship cannot raise equity funds from angel investors, venture capital firms or PE funds. Banks also tend to restrictions on the amount of credit they can lend.
Due to the disadvantages mentioned above, this registration will be suitable only for small businesses and the unorganised sector with a limited period of existence.
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