Sole Proprietorship
BUSINESS
Single, small business owners often choose this type of business organization. It is not a legal entity separate from the business owner. In most cases, it is a fictitious name that someone does business under, such as Tim’s Plumbing Service. The name is just a trade name instead of a legal entity.
How to check proprietorship status?
In India, we don’t have to register sole proprietorship. Hence, there is no platform to check the status of a sole proprietorship. However, if a proprietor has applied for GST registration, the GST registration and filing status of the proprietorship can be checked on the GST Portal to confirm the existence of the proprietorship.
Sole Proprietorship Registrations & Licenses
To run a proprietorship business in India, the proprietor will have to obtain PAN and Aadhar. The proprietor must obtain GST registration, UDYAM registration and open a bank current account. In some states, the proprietor will also have to obtain Shops & Establishment Act registration.In addition to the basic requirements above, additional licence and permits may be required depending on the industry, state, and local regulations.
Registering a Proprietorship Online through NeehitInfo
You can easily register a proprietorship online through IndiaFilings. To register a proprietorship, only the PAN & Aadhaar card of the business owner is required. We can help you obtain the following registrations in less than 15 days:
GST Registration
UDYAM Registration
Zero-Balance Business Current Account with LEDGERS Accounting Software
Once, you have registered for the proprietorship registration on NeehitInfo,
please follow the steps below and upload the following documents by logging into LEDGERS.
Step 1: Login to LEDGERS using the email address for payment.
Step 2: Go to Services Tab & Select Proprietorship Engagement
Step 3: Upload your PAN & Aadhar Card Copy
Step 4: An NeehitInfo Registration Expert will file the registration application with GST Department, MSME Department and Bank for Current Account.
Step 5: Access to LEDGERS Accounting Software is provided for GST invoicing, GST filing and other services.
PAN Card for Proprietorship Firm
A proprietorship is not a separate business entity. Hence, there is no procedure to obtain proprietorship PAN card. The PAN card of the business owner is used for the proprietorship.
Obtaining GST Registration for Proprietorship
Permanent Account Number (PAN) of Proprietor
Digital Signature Certificate of the Authorized Signatory
Consent by Proprietor for obtaining GST Registration
Photograph of Proprietor and Authorized Signatory
Bank Account Details: A scanned copy of a cancelled cheque with the business entity's name, bank account number, MICR, IFSC, and branch information.
Declaration / Authorization to Authorized Signatory
For commercial purposes, the rent / lease agreement should be in the name of the proprietor.
Additional documents such as Aadhaar Card, Driving Licence, Passport, or Voter ID in the name of the Owner with the complete address of the premises should also be provided if the address on the ownership document (Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill) is incomplete.
Obtaining UDYAM Registration for Proprietorship
Udyam Registration can be obtained online to avail various benefits available for small and medium sized businesses. Once the GST registration is obtained, the IndiaFilings team would help obtain UDYAM registration by submitting Aadhaar card, PAN card and GST certificate to Government.
Bank Account for Proprietorship
The bank current account for a proprietorship will be opened in the name of the business owner using his/her PAN. The business owner will have to submit proof for doing business. Any two of the following documents can be submitted to create a current account instead of savings account in the name of proprietorship:
GST registration certificate
Shop & Establishment Act license
License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities,
Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening a bank account etc.
Compliances for Proprietorship
The following are some of the compliances that are applicable for a sole proprietorship:
Income Tax Filing: The business owner of a proprietorship will have to file personal income tax return using form ITR-3 or ITR-4.
Business Income: Only income tax forms ITR-3 and ITR-4 allow for declaring business income. Hence, all proprietorships will have to file form ITR-3 or ITR-4 to be compliant with the income tax regulations.
GST Return Filing: If a proprietorship has GST registration, GST return must be filed every month and quarter as per the scheme under which the business is registered.
TDS Returns: In case the proprietorship is having employees or purchasing goods/services beyond a certain threshold - tax must be deducted at source and TDS returns must be filed every quarter.
In addition to the above, various other compliance requirements maybe applicable to the proprietorship based on industry and location.
Advantages of a sole proprietorship include:
Disadvantages of a sole proprietorship include:
The main disadvantage of a sole proprietorship is that the owner has unlimited personal liability for all business debt. If the business is sued, the owner is personally liable. Therefore, the owner’s personal assets could be in jeopardy. Another disadvantage is that when the owner dies, the business terminates or becomes defunct.
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Sole proprietorships are by far the most popular type of business structure in the U.S. because of how easy they are to set up. There’s a lot of overlap between your personal and business finances, which makes it easy to launch and file taxes. The problem is that this same lack of separation can also land you in legal trouble. If a customer, employee or another third party successfully sues your business, they can take your personal assets. Due to this risk, most sole proprietors eventually convert their business to an LLC or corporation.