Proprietorship firm is also called a sole proprietorship firm, it is the easiest and simplest form of business for individuals to run and maintain. In India, most of the traditional businesses such as retail, wholesale, small-scale service providers, and retail and wholesale outlets were mostly registered as proprietorship businesses due to their simplicity and easy setup. The most significant advantage of a proprietorship business is nominal setup and annual cost.
What is a sole Proprietorship Company?
A proprietorship firm is an individual business setup, it is not mandatory to register a sole proprietorship in India. All forms of small business such as street vendors, home-based businesses, traditional retail vendors, and food outlets are generally run by a single person, so we can usually classify them as proprietorship businesses. One of the widely used business structures in our country with minimum compliance with the income tax act.
How to register proprietorship in Chennai?
Registration for a proprietorship is simple in Chennai, registration for a proprietorship means getting registration in the Ministry of micro small, and medium enterprises by applying for the MSME Udyam registration certificate. Practically, this udyam certificate acts as a proof for the date of commencement of business. For proprietorship firms, the bank accounts can be opened if they apply for GST registration, however we should consider whether it will be beneficial if we apply for voluntary GST registration.
Documents required for Udyam MSME proprietorship registration
Documents required for proprietorship registration
1. The checklist
2. Pan card of proprietor
3. Aadhaar card
4. Bank account details
Steps to Register
What are the additional registration required
Each kind of business requires different types of registration, let us give some important kinds of business and relevant registrations required along with proprietor registration
1. GST Registration – GST registration is mandatory when turnover crosses Rs.40,00,000 for a supplier who is dealing only in
goods, the threshold limit is Rs.20,00,000 in case the supplier is the seller of goods as well as a service provider.
2. FSSAI registration or license – Every food business operator dealing with food products shall apply for food safety
registration or food safety license based on their turnover and type of business.
3. IEC or import export code application – Import export code is required for every business engaged in the import or export of goods or services.
4. Tan number application – TDS should be deducted by a person on a certain transaction when turnover or transaction amount crosses a certain limit, subject to other conditions. We request you take care of TDS compliance properly to avoid huge penalties and interest.
5. Fire safety – A fire safety license is mandatorily applicable for restaurants, supermarket, etc, and other business which is subjected to the risk of fire accidents
From Auditor DESKWe recommend MSME Registration as a primary document that every proprietary firm should have for business existence.
Frequently Asked Questions
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Expert guidance for every sole proprietorship business owner
- Always calculate profitability with GST registration and without GST registration if it is not mandatory, as GST registration is practically made into a primary document for current account opening by most of the banks we should not tend to register GST immediately without any calculations.
- File income tax return each year within the due date
- Keep personal transactions and business transactions separate so that it is helpful for the assessment of financial growth, working capital management, and proper financial planning.
- A proprietorship business is a flexible form of business structure that is not specifically monitored by any of the specific acts, rules, or regulations, so in most cases, we ignore giving importance to business documentation, accounting, etc. Every business requires to be streamlined business processes and procedures which is irrelevant to the form of business, there are thousands of proprietary businesses with a few 100 crores only because their proprietors considered their business requirement rather than a legal requirement.
- If you are comfortable spending a few thousand more, it is recommended to opt for partnership firm registration as it gives more advantages of separate legal identity, improved credibility, and flexibility to add and remove partners.
- The only practical and considerable disadvantage between partnership and proprietorship is TDS provisions are applicable irrespective of the turnover limit for the business.
- A self-employed individual can opt for a proprietorship form of business which will give them an advantage in future business development through the advantage of improved credibility, the minor difference can make your future success, and business transactions made through current accounts make wonders for certain business needs
- Capital-intensive businesses should go for other forms of business structure, proprietorship will face a deadlock situation in case of rapid expansion and financial needs.