Proprietorship Firm Registration

Posted On September 21, 2023

Proprietorship is the type of business setup in which is owned and controlled by a single person, proprietorship or sole proprietorship is mutual. It is very often noticed that one always gets, puzzled about the two major forms of business i.e., sole proprietor and one-person company (OPC), it must be noted OPC is almost like a sole proprietorship how one individual owns all the assets of the company and runs the business, but there’s an added advantage for proprietorship as the cost might be lesser in comparison to one person company and there is no need of board meeting to be conducted, like in the case of OPC.  Unless like any other forms of business under the Companies Act 2013 where an individual and the entity are different entities, a sole proprietorship and his business are considered a single entity liberal example of proprietorship can be from cloth store to freelance graphic designer

Trump cards to have a sole proprietorship

– singly owned business:  proprietorship as the definition of the word describes, every business is open and run by an individual. this helps one person to have accountability towards profit as well as losses and all the profits belong to one person same applies to losses as well

– No interventions of any specific government:  Under proprietorship, there are no laws more specific led by any statutory authority like how it is applicable to partnership, limited liability partnership, or any form of company. However, there are guidelines given to every proprietorship.  This also benefits while keeping privacy in the business as there is neither any intervention of any government nor private authority

– Taxation is effortless:   for any proprietorship or owner, the tax will be applicable as the individual and not as a separate entity. whatever tax is applicable is on business (proprietorship) and whatever is applicable to a person is the same therefore tax must be applicable to an individual.

– Simplified paperwork: setting up a proprietorship is having done with minimal paperwork for registration and setting up the whole entity, as there are very few compliances applicable to the proprietorship form of business.

Following are the Documents Required for registration of proprietorship:

Bank Documents.
GST Registration Document.
PAN Card Number.
Identity proof of Proprietor.
Rental Agreement for registered office proof.
Sale Deed or electricity bill for the self-owned property.
KYC Documents.

Procedure for Registration

• Business Name Selection: Select a distinctive and appropriate name for your business. Ensure that the name does not infringe on any trademarks or copyrights.

• Business Plan: Develop a business plan outlining your business goals, target market, products or services, pricing strategy, and financial projections. This is often required when registering a business.

• Legal Structure: Understand the legal structure of a proprietorship. In a proprietorship, the owner and the business are considered one entity for legal and tax purposes.

• Business License: Check with your local city or county government to determine if you need a business license or permit. Depending on your location and type of business, you may need specific permits or licenses.

• Tax Identification Number (TIN): Obtain a Tax Identification Number or Employer Identification Number (EIN) if required in your country. In the United States, for example, sole proprietors can use their Social Security Number (SSN) as their TIN.

• Register with Local Authorities: In some regions, you may need to register your business with the local authorities or the chamber of commerce. This may involve submitting basic information about your business.

• Fictitious Business Name (DBA): If you are operating under a name different from your own, you might need to file a “Doing Business As” (DBA) or fictitious business name registration. This ensures that you can legally use the business name.

• Business Bank Account: A separate bank account needs to be open to keep personal and business finances separate. It is an important part to keep your records for regulatory purposes.

• Business Insurance: Consider getting business insurance to protect your personal assets from business-related liabilities. The type of insurance you need may vary based on your industry and location.

• Record Keeping: Maintain accurate financial records, including income, expenses, invoices, and receipts.

• Tax Compliance: Understand your tax obligations as a sole proprietor. This includes income tax, self-employment tax, and any other applicable taxes. Pay your taxes on time and file necessary tax returns.

• Local Regulations: Be aware of and comply with any local regulations, zoning laws, health and safety standards, and other rules that apply to your business.

• Optional: Business Permits and Licenses: Depending on your industry and location, you may need specific permits or licenses. Research your local requirements and obtain any necessary permits.

• Annual Renewals and Compliance: Keep your business registrations, licenses, and permits up to date by renewing them as required. Comply with any ongoing reporting or tax obligations.

• Seek Legal and Accounting Advice: Consider consulting with legal and accounting professionals to ensure that you are following all legal requirements and best practices for your specific business.

It’s important to note that the specific steps and requirements can vary significantly by country, state, or region. Therefore, it’s advisable to consult with local government agencies or seek legal advice to ensure that you are meeting all the necessary obligations and requirements for your proprietorship registration.