What is a proprietorship?
A sole ownership is a sort of unregistered business substance that is possessed, overseen and constrained by one individual. Sole ownership is the most widely recognized sort of business in India and it is utilized by generally miniature and independent ventures working in the chaotic areas.
Ownerships are easy to begin and have insignificant administrative consistence prerequisites for working. This element is ideal for business visionaries who are getting into business unexpectedly and for independent ventures with not many customers.
Who is a proprietor?
The proprietor of a sole ownership business in India is known as an owner. It can’t be a corporate or lawful element. The owner and the ownership are viewed as a similar element lawfully.
The PAN and different archives of the owner are the reason for getting all other business enrollments and licenses. In the event of any issues of risk in the business, the owner is held by and by subject for it.
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- Simplicity of arrangement The business person can begin tasks and get installments from customers as no enlistments are needed to begin an ownership.
- Simplicity of consistence The other bit of leeway of a Proprietorship is that it requires no extra consistence by and large. The PAN of the owner and ownership are very much the same. Henceforth as a rule, just annual government form in Form ITR-3 must be recorded each year.
- Simplicity of disintegration The owner doesn’t need to especially wrap up the organization incase he needs to stop tasks. This spares a ton of time and exertion.
Every ownership varies regarding the capacities, demographic and the method of activities. Consequently, several the enrollments referenced underneath will be material.
General questions (7)
How many are required to start a proprietorship?
Only one person is required to start a proprietorship as it can have only one promoter.
What are the requirements to be a proprietor?
The proprietor must be an Indian citizen and resident. Non-resident Indians and persons of Indian origin can only invest in a proprietorship with prior approval from the Government of India.
Will my proprietorship firm have a separate legal identity?
No, the proprietorship firm and the proprietor are one and the same legally. The PAN of the proprietor will be the PAN of the firm. Therefore, there will be no separate legal identity for the business. The assets and liabilities of the business and the proprietor will also be one and the same.
How can I transfer my proprietorship?
A business operated under a proprietor cannot be transferred to another person unlike a limited liability partnership or a private limited company. Only the assets in the proprietorship can be transferred to another person through sale. Intangible assets like government approvals, registrations, etc., cannot be transferred to another person.
Can other people invest in a proprietorship?
Proprietorship firms are business entities that are owned, managed and controlled by one person. So they cannot issue shares or have investors.
What is the capital required to start a proprietorship?
There is no limit on the minimum capital required to start a proprietorship.
Can I later convert my proprietorship into a company or LLP?
Yes, there are procedures for converting your proprietorship business into a company or an LLP at a later date. However, the procedures for the same are cumbersome, expensive and time-consuming. Therefore, it is wise for entrepreneurs to consider and start an LLP or a company in case they are expecting it to be operational at a bigger scale or they want to raise investment.
Registration Process (7)
What are the documents required to start a proprietorship?
PAN of the proprietor along with the identity and address proof is sufficient to start a proprietorship and obtain other registrations, as applicable or required.
How will Bizcruise help me start a proprietorship?
AnBizcruise associate will understand your business requirements and help you start a proprietorship by obtaining the relevant registrations. Bizcruise will help obtain the necessary registrations to help the proprietor open a bank account in the name of the business, thereby providing an identity for the business.
How do I open a bank account for a proprietorship?
The Reserve Bank of India mandates that the proprietor provide two forms of registration of the proprietorship along with the PAN, identity proof and address proof of the proprietor. The two forms of registration can be any two of the following: MSME registration, Shop & Establishment Act registration, professional license, chartered accountant certificate or others as provided in the RBI KYC norms.
Will my firm have a registration certificate?
Proprietorship firms do not have a certificate of incorporation or a certificate of registration. The identity and legitimacy of a proprietorship firm is established by registering with the relevant or applicable Government authorities.
How to register the name of a proprietorship?
There is no registry or regulation for registering the name of a Proprietorship. Therefore, proprietorship firms can adopt any name that does not infringe on registered trademarks. Since there are no regulations for registering the name of a proprietorship, the only way to ensure exclusive use of the business name is to obtain a trademark registration of the business name.
Is audit required for a proprietorship?
It is not necessary for proprietorships to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criteria.
What are the annual compliance requirements?
Proprietorships will have to file their annual tax return with the Income Tax department. However, annual reports or accounts need not be filed with the Ministry of Corporate Affairs which is required for an LLP or a company.