Steps to Register a Proprietorship Firm in India

Posted by Enterslice India on September 18th, 2018

A sole proprietorship is a kind of a business too but unregistered one. And it’s owned by one person only. He is the only one to control and manage it.A Sole proprietorship is also a very common form of business in India and used by those mostly who are into the micro and small businesses that operate in an unorganized sector. The Sole proprietorships are rather easy to start as well and require a very minimal amount of regulatory compliance to operate. However, what’s different in them is that once the promotion phase is over, it doesn’t offer its promotor the kind of host of benefits like the private limited companies like a limited liability partnership, a certain corporate status in the business market, existence as a separate legal entity, any degree of transferability etc.

These are such desirable features of any form of business that the sole proprietorship lacks. And this is why a sole proprietorship is rather a suited form of business for only the unorganized small sized businesses that are to remain small and for a limited time period of existence.There’s as such no mechanism that has been provided by the government of India for registering the sole proprietorships. Now because there’s no proper way of sole proprietorship Registration, it will require other ways to prove its existence like through tax registrations and other kinds of business registrations that usually a business requires under the rules and regulations. Now for an instanceGST registration can have the name of the supposed proprietor for the sake of establishment of the proprietor's business as a sole proprietorship. This is why the Registrations of the Proprietorship will be in the name of its Proprietor which would make him the solely liable for all the responsibilities and other liabilities of the sole proprietorship business.

An average of 3 to 5 days are needed for complete registration of the sole proprietorship through means of other registrations.

Reasons to Register a Proprietorship Firm

1)               Easy to start–It’s easy to start because of the minimal requirements for formalities etc. but yes, it will be relatively harder for a sole proprietor to open up a bank account for obtaining a gateway for payments in the name of their businesses because more of the VAT, service and GST registrations are required.

2)               Its business name – Because the name of the sole proprietorship isn’t exactly registered, it could easily have any name and use it as long as it’s not someone’s registered trademark. The con here would be the fact that because it is not a registered one, anyone can use it too.

3)               It has LowerTaxes–The sole proprietorships that are with an income of less than Rs3 lakhs need not to pay any income tax.

4)               Single Promoter–Sole proprietorship is the only kind of entity that has only one promotor

5)               Easy to Close–The sole proprietorships are for small legal purposes and there’s just never a formality for shutting it down. In most of the cases, for closing the proprietorship only the tax registration that has been done in the name of the sole proprietor needs to be cancelled.

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