Proprietorship Registration

Sole Proprietorship Registration in Delhi NCR India

The most straightforward and popular company structure in India for an individual to own and run a firm is a sole proprietorship. It is mainly owned and managed by one person. There are no shareholders or partners. It also considers that the business and you are legally the same, which means your personal assets and liabilities are not separate from the business. There is no need for any formal registration for a sole proprietorship, although certain registrations under various Acts (like the Shop and Establishment Act, GST) might be beneficial. Sole Proprietorship is beneficial for individuals who are starting small businesses with limited investment.

Benefits of a Sole Proprietorship Firm Registration

Diverse business structures offer distinct advantages. The advantages that a sole proprietorship business provides to its owners are as follows.

Quite Simple to Set Up:

There is no registration procedure required of an applicant who wants to manage their business operations as a sole proprietor. To operate their business lawfully, they simply need to obtain licenses or registrations related to their line of work.

Searching for little financial outlay:

Small businesses like retail stores, supermarket stores, and so on frequently use the sole proprietorship model since it is advantageous for low-costing concepts. 

Guarantees no sharing of profits:

As exclusive proprietors, they enjoy complete control over their profits and act as the only owners of their business

Follows the basic requirements:

Since the sole proprietorship business model is not governed by any particular laws, it can function without having to comply with onerous regulations. They are able to operate without a Certificate of Incorporation or Registration Certificate, in contrast to businesses operating under the Companies Act of 2013[AS1] . Furthermore, they are not required to share yearly reports with MCA. These business must, however, continue to adhere to applicable GST compliances. Because of this, they must also register in accordance with the current GST Act.

Draw in less Tax:

Knowing about sole proprietorship tax obligations is crucial for any individual running their own business. There are still particular tax obligations to meet even though the tax authority views a sole proprietorship and a single proprietor as one and the same entity. The current Income Tax Act requires that all sole proprietors file an income tax return. In order to maintain openness and comply with tax laws, this return provides a means of disclosing the revenue and earnings the company made during a specific fiscal year.

Please keep in mind that tax estimation is done using the taxpayer's appropriate income tax slab rates. As a result, the sole proprietorship business is exempt from the necessity to file a separate tax return.

Decision-Making That Is Smooth:

When it comes to making decisions, sole proprietorship businesses are superior to other business models. It gives the owner total power to decide anything pertaining to business matters on their own, free from outside influence.

Low-income firms are not required to conduct audits:

The sole proprietorship's financial records are exempt from the need for an obligatory audit. It only becomes relevant when the revenue of the business exceeds a specific turnover criterion set by the relevant regulator.

Disadvantages of Sole Proprietorship Firm Registration

• Infinite liability: If you are a lone proprietor, your company and yourself are one and the same. This implies that any business debts or court orders are secured by your personal assets, such as your house, car, and savings. You are accountable for your company's debts if it fails.
• Financing: In a proprietorship, the owner's personal assets may be encumbered or attached if they are unable to pay business loans or taxes. Hence, the owner of this kind of business structure will be held personally liable until all liabilities are satisfied.
• Maintaining consistency: The sole proprietorship will immediately dissolve in the event that the business owner passes away or becomes disabled. Thus, business continuity won't occur.
• Growth potential: A lone proprietorship is dependent only on the knowledge, abilities, and time of its one owner. This might reduce growth in contrast to arrangements that permit the addition of new investors.
• Compliance with Laws and Regulations: While simpler than other structures, you're still responsible for complying with all business regulations and legal requirements, which can be time-consuming and complex.

List of Records Needed to Conduct Business as a Sole Proprietor

• Owner's PAN, Photographs, and Aadhar Card.
• Business utility bills such as electricity or water bills.
• Copy of bank statement along with further information like account number and IFSC code.
• By completing the necessary e-application on the GST portal, applicants can take advantage of GST registration.

Procedure for Establishing Sole Proprietorship Business in Delhi NCR India

Depending on your individual requirements, starting a sole proprietorship business in India requires getting a number of permits and registrations. Although there isn't a single, centralized registration procedure, the following is a rough rundown:

Step 1 PAN Card:

Any Indian firm that wants to become legally recognized must acquire an Company PAN number[AS1] . The taxpayer must have synchronized their PAN card in order to file an IT return. To obtain the Aadhar number legally, the applicant can go to the closest Aadhar, Seva Kendra, or E-Mitra.

Step 2: Registration of Shop and Establishment Act:

In most states, this registration is required within 30 days of starting operation. One can also contact the local labor department for further information.

Step 3: MSME Registration (UDYAM): 

Registering on the UDYAM portal offers government benefits for micro, small, and medium organizations.

Step 4: Registering GST: 

It is mandatory to register for GST if your annual income is more than 20 lakhs[AS2] . Expect few cases where the limit is 10 lakhs.

Step 5: Business Bank Account:

Create a separate bank account to maintain a clear financial record for the business.