Reasons to Register a Proprietorship Firm
Easy to Start
Proprietorship needs minimal registration. Therefore, it is one of the easiest form of business entity to start with minimal formalities. However, after starting up a Proprietorship, it is relatively harder to open a bank account or obtain a payment gateway in the name of the business – since more registrations like MSME, GST, TAN may be required.
Since the name of a proprietorship is not registered, a proprietorship can choose to have any name – as long as it does not infringe on a registered trademark. However, since the name is not registered, any other person can also use the same business name unless trademark registration is obtained.
Proprietorship is the only type of business entity that can be registered and operated by one person. To register a one person company, a nominee Director is required and for all other types of entities like company or LLP or partnership firm, two or more promoters are required.
Proprietorship with less than Rs. 3 lakhs of income is not required to pay any income tax, as proprietorship’s are taxed as the individual owing the business. However, unlike a company or LLP, a proprietorship cannot enjoy some of the tax deductions, which could potentially increase the tax liability.
Easy to Close
The Proprietor and the proprietorship are one and the same for all legal purposes. Hence, there is no formality for winding up or closing a proprietorship. In most cases, to close a proprietorship, only the tax registrations obtained in the name of the proprietor must be cancelled.
Procedure To Obtain Sole Proprietorship Registration Certificate Online
Completion of Registration
Documents Required for Sole Proprietorship Registration
- Mobile no and Email Address of Proprietor.
- PAN of Applicant along with any One Address Proof (Voter ID, Passport, Driving License, Aadhaar).
- Photograph of Applicant.
- PAN / ID proof and Authorization Letter where applicant and Authorized Signatory are different.
- Proof of Principal place of Business – Bank Statement / Consent Letter/ Electricity Bill/ Rent Agreement.
- Proof of Additional place of Business – Bank Statement / Consent Letter/ Electricity Bill/ Rent Agreement.
- Bank Account details – Bank Statement / First Page of Passbook.
- Digital Signature of Authorized Signatory / Proprietor.
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