When an individual runs a business, that type of business is called a proprietary business, and the owner of the business is known as the proprietor. Proprietorship is the most common form of company used in India. You can set up and operate a company with minimal legal compliance. If you are wondering how to proprietorship company registration. Let’s read on.
However, there is no perfect way to register real estate through the Government of India. Tax registration and other business registrations are the correct way to prove the existence of a business.
What Is a Proprietorship Company
A proprietorship, also known as a sole proprietorship, is a type of business structure that is owned and operated by a single individual. The owner is responsible for all aspects of the business, including making decisions, managing the business, and assuming any debts or liabilities.
A proprietorship is the simplest and most common type of business structure, and it does not require any formal registration or paperwork to set up. However, the owner is personally responsible for the business’s debts and liabilities, and the business may be more difficult to finance because the owner’s personal assets may be at risk.
How Do I Register My Company as a Proprietorship in India
To register a proprietorship company, you will need to follow the steps below:
Choose a business name: The name of your business should be unique and should not be similar to any existing business name. You can check the availability of the business name by searching online or by contacting the local authorities.
Obtain a PAN card: A PAN (Permanent Account Number) card is a unique identification number issued by the Indian Income Tax Department to individuals and businesses. You will need to apply for a PAN card to register your proprietorship company.
Obtain a TAN card: A TAN (Tax Deduction and Collection Account Number) card is a 10-digit identification number required for businesses that are required to deduct or collect tax.
Obtain a Business License: Depending on the nature of your business, you may need to obtain a business license or permit from the local authorities.
Register for GST: If your business has an annual turnover of more than INR 40 lakh, you will need to register for GST (Goods and Services Tax).
Obtain a bank account: You will need to open a business bank account to manage the financial transactions of your proprietorship company.
Register for social security schemes: If you have employees working for your business, you will need to register for social security schemes such as the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI).
How Do I Register Myself as a Sole Proprietorship
The following section provides a list to register yourself as a sole proprietorship.
- Get an Aadhaar card.
- Apply for a PAN card.
- Open a company bank account.
- Secure shop and establishment act license.
- Register under GST.
What Are the Types of Proprietorship
A sole proprietorship can act as an independent contractor (freelancer), business owner, or franchisee.
Independent Contractor:
Independent contractors are self-employed sole proprietors who work on projects with clients on a contractual basis. It’s up to you which customers you take on, but it often depends on the processes and methods they require.
Business owner:
Entrepreneurs can also become self-employed sole proprietors. Unlike contractors, you have much more autonomy when doing work for your clients. The operation itself can be further complicated by employees and intellectual property.
Franchisee:
A franchisee can also be a sole proprietorship. Franchisees benefit from the leadership and business model of the larger brand. In return, royalties are paid to the franchisor.
What Are the Advantages of a Proprietorship
There are several advantages to operating a proprietorship, including
Easy to set up: A proprietorship is relatively easy to set up and does not require any formal registration or paperwork.
Fewer regulations: Proprietorships are subject to fewer regulations than other business structures, such as corporations or limited liability companies (LLCs).
Lower costs: Proprietorships generally have lower startup and operating costs than other business structures.
Personal control: The proprietorship owner has complete control over the business and can make decisions without consulting anyone else.
Flexibility: A proprietorship is flexible and can be adapted to meet the needs of the owner.
Tax benefits: Proprietorships may be eligible for certain tax deductions that are not available to other business structures.
Sole proprietorship vs independent contractor
| Points | Sole Proprietorship | Independent Contractor |
| Meaning | A sole proprietorship is a sole business owner | An independent contractor offering services to groups or the general public. |
| Nature | Owner of a company that provides clients with goods or services | Non-employee rendering expert services for a fixed cost |
| Income Source | Profits from contract orders may or may not be included in revenues from sales of products and services. | Receiving payment from clients or employers for contract employment. |
| Payment | Based on the quantity of products or services rendered | Project- or hour-based pricing |
| Popularity | A simple method for starting a business | It increases as the number of gig workers and freelancers grows |
Frequently Asked Questions (FAQs):
Can I use my own name for sole proprietorship?
Anyone can easily incorporate their own business under the trade name of their choice.
Does a sole proprietor need a business bank account?
To receive payments on behalf of a sole proprietor, you will need to open a bank account.
Can I use my personal bank account for business?
Do not use your personal account primarily for business funds as it may affect your legal liability.
Conclusion
Now you got to know about proprietorship company registration. The sole proprietorship is the simplest form of business in India as it is not governed by any specific laws. For sole proprietorships, compliance requirements are minimal and easy to conform. A sole proprietorship is a business that runs by one person. The company’s decision-making and management are in the hands of one person.
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