A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.
The sole proprietorship is the simplest business form under which one can operate a business. It simply refers to a person who owns the business and is personally responsible for its debts. There is no specific provision prescribed by the government for the registration of the sole proprietorship firm.
Legal Window will provide you all the necessary services under one roof and provide all registration you require and also guide for other compliances. You may get in touch with our team on 072407-51000 or email email@example.com for Sole Proprietorship registration.
Types of Registration for Proprietorship firm
There are various types of registrations like GST Registrations, Shop Act License, MSME etc. through which we can get the firm registered. There is no specific law pertaining to selection of the trade name and can be any name of your choice and you can protect it by taking a trademark on the business name. Various registrations through which a firm can be established are as follows:
Goods and Services Tax Registration:
- GST registration is one of the ways of getting your sole proprietorship business registered. You can apply for GST registration if you are a supplier of such goods and services that are required to get registered under Goods and Services Act.
- If a sole proprietor is not covered under mandatory business registrations that are required to take GST registration it can also get voluntarily registered under the Act to get all the benefits of GST such as credit of tax paid on input of Goods and Services.
Shop and Establishment Act Registration:
The Shop and Establishment Act is a kind of trade license which is granted by the State Authorities and every state has prescribed different rules an regulations to get oneself registered.
If sole proprietor has a shop as place of business it can get itself registered under Shop and Establishment Act.
Note: Shop means
- A place where good are sold (Retail or wholesale)
- A place where services are provided
- An office, storeroom, godown, warehouse or workplace which used in connection with such trade or business
Food Safety and Standards Authority of India (FSSAI) Registration:
- FSSAI stands for Food Safety and Standards Authority of India which is an organization that monitors and governs the food business in India.
- Every food business operator involved in the manufacturing, processing, storage distribution and sale of food products must compulsorily obtain FSSAI Registration or License.
- Food Safety and Standards Authority of India (FSSAI) Registration is mandatory for all the Food Business Operators (FBOs).
Micro, Small and Medium Enterprises Registration:
Proprietor also can register its business under MSME. Sole proprietor can get its business registered under MSME through Udhyog Aadhaar. By applying for Udhyog Aadhaar any business can get itself registered in MSME and can avail its various benefits introduced by the ministry.
Import Export Code (IEC) Registration:
IEC Code is unique 10 digit code issued by Directorate General of Foreign Trade, Ministry of Commerce and Government of India. IEC Code is “Importer Exporter Code” for import or export in India, and mandatory for those who are involved in Import or Export of Goods or Services.
If proprietor has a business of Import or Export, than it is mandatory to get IEC registration.
Advantages of Proprietorship registration
Process of Registration of Proprietorship firm registration
FAQs on Registration of Proprietorship Firm
Sole Proprietorship firm is a business structure which is unorganized and there is no specific law or mechanism for its registration. Legal Window can help you get your firm registered by analyzing the type of registration necessary for your business type.
Current account is not a requirement. You can use savings account. You would need to pay taxes on interest. Savings account have limitation on number of withdrawal in a quarter, hence most sole proprietorship have current account.
No, Proprietorship firms are business entity that are owned, managed and controlled by one person. So, proprietorship firms cannot issue shares or have investors.
The firm and the individual do not have separate identity even after the sole proprietorship firm is registered. Hence, the PAN card of both remains the same and you don’t need to apply for new pan card.
RBI has mandated to provide two forms of registration along with the KYC of the proprietor in order to open a current account. The two forms of registration can be any as we have laid down above and it entirely depends on the form of your business.
There is no regulation laid down for checking the name availability for registering the Sole Proprietorship Firm. So, any person can start its business easily with a trade name of its choice. Any trade name can be used in case it does not clash with any brand name. The name does not require any approval from registry. The tradename can further be safeguarded by taking a trademark.
Proprietorship business does not have a separate legal entity as OPC has. For compliance point of view you can say proprietorship business is better than OPC. But in case of Liability proprietorship has unlimited liability while OPC has limited liability.
You can establish a Sole Proprietorship Firm with any desired amount of Capital which is sufficient to commensurate the business.
A proprietorship firm can be converted into a company or LLP. However, the procedures and timelines for the conversion are expensive and time-consuming. Therefore, it is advisable to consult with the professionals before starting the business.
Some of the disadvantage are as follows:
- No separate Legal Entity
- Unlimited Liability of the Individual
- Fund raising is not allowed
- There is no perpetual existence