Essential Licenses and Registrations for Proprietorships

To operate a proprietorship in India, you need the following key registrations:

• Ensure to apply for any additional registrations required for business purposes under relevant laws.
• UDYAM Registration to recognize your business as a Micro, Small, or Medium Enterprise (MSME) and access government benefits.
• GST Registration if your business exceeds the specified turnover thresholds for collecting and paying GST.
• Trade Licence.
• Shops and Establishment Act Registration depending on your business location to comply with local labour laws.

Advantages of Proprietorship

• Easy Registration: No formal incorporation or dissolution process is required. However, necessary licenses and tax registrations may be needed to operate the business legally.
• Lower Compliance: Proprietorships usually face fewer compliance requirements compared to other entities like LLPs or companies, which must file various statutory returns and undergo annual audits by a chartered accountant.
• Simplicity: With no need for partners or shareholders, proprietors can manage the business with minimal documentation, making it a good option for very small businesses.
• Quick Decision-Making: Since the proprietor has complete control, business decisions can be made quickly without needing approval from others.
• Complete Control: The proprietor owns all assets and is responsible for all business operations, providing full authority over finances and business activities.

Disadvantages of Proprietorship

• Limited Funding: Sole proprietorships rely on the proprietor's savings, borrowings, and credit. Raising funds from banks can be difficult, and equity funding is not possible since this structure doesn't allow profit-sharing or shareholding.
• Personal Liability: The proprietor is personally responsible for any business debts or liabilities. This means personal assets could be at risk if the business cannot meet its obligations.
• No Business Continuity: In the event of the proprietor's death or disability, the business ceases to exist, which can be a major drawback for long-term continuity.
• Growth Limitations: Due to restrictions in fundraising, liability protection, and continuity, proprietorships are typically suited only for small-scale businesses.
• Unincorporated Business: Proprietorships are unincorporated, meaning there is no central registry to verify their active or inactive status. This often places them in the unorganized business sector.
• Registering a sole proprietorship can be done online with the help of OnEasy. The process requires minimal documentation, primarily the proprietor’s PAN and Aadhaar. We assist in securing the following registrations: 1.GST Registration, 2. Zero-Balance Business Current Account. Our team will guide you through the process, ensuring smooth registration and compliance with relevant laws.

GST Registration for Proprietorship

We handle GST registration as part of our service. To complete the registration, you will need to provide the following documents:

• PAN Card of the proprietor
• Consent for GST Registration
• Photograph of the proprietor
• Bank Account Details: A scanned copy of a cancelled cheque with relevant bank details
• Rent/Lease Agreement for business premises(if applicable)
• Aadhaar Card, Driving License, Passport, or Voter ID for address proof.

UDYAM Registration for Proprietorship

Once GST registration is complete, we will assist you in obtaining UDYAM Registration to access various benefits available for small and medium enterprises. This process requires your PAN Card, Aadhaar Card and GST Certificate.

Bank Account for Proprietorship

A current account in the proprietor's name can be opened using their PAN. To open a business bank account, you need to submit two of the following documents:

• GST Registration Certificate
• Shops and Establishment Act License
• Certificate of Practice from relevant professional bodies (e.g., ICAI, ICSI) Shops and Establishment Act License
• IEC (Importer Exporter Code) if applicable

Compliance for Proprietorship

Sole proprietorships are subject to the following compliance requirements:

• Income Tax Filing: Proprietors must file personal income tax returns using forms ITR-3 or ITR-4, depending on the nature of the business income.
• GST Return Filing: If registered for GST, proprietors must file GST returns monthly or quarterly, depending on the chosen scheme.
• TDS Returns: If applicable, proprietors must deduct tax at source for employees or suppliers and file TDS returns quarterly.
• Other compliance requirements may vary based on the business’s industry and location.

Why Choose OnEasy for Proprietorship Registration

OnEasy makes the process of setting up your proprietorship easy and stress-free. Contact us today to get started with your sole proprietorship registration!