Proprietorship firm consists only single person as its owner and it is very small in nature and with less legalities. Similarly, Capital Requirements are also has no criteria to start the business as it is not a legal entity. Proprietorship firm also known as its full name "SOLE PROPRIETORSHIP FIRM".
When one wants to start up small businesses, varying from establishing local studios, shops etc, where a single person invests in the form of capital and avails profit and loss. This kinds of business requires a very simple process with minimal legal compliance and formation costs. This follows the easy registration process, under various laws, such as Micro, Small and Medium Enterprises (MSME), Tax Laws, this also includes, different acts, like Shop Act, Labor Act.
Being registered under ''Proprietorship firm'', does not require any specific legal certificate, which enables a small businessman to easily afford the expenditure. If you are looking for new venture then this Proprietor ship firm is the best option with small capital in a short time frame.
VAKIL KARO helps to register and operate the proprietorship firm and its time to time compliance.
- KYC of Single Owner (Proprietor)
(PAN, ADHAAR, Photo, Mobile, Email)
- Firm Name
- Firm Office Address (Rent Agreement/Electricity bill/ Municipal Tax Receipt etc.)
To Register the Proprietorship firm, Time Taken depends upon the Certificate taken. Usually it takes 7 days from the filing of documents. As per Certification the time takes as follows—
- GST Certificate – 7 -10 days
- MSME Certificate – 1-2 days
- FSSAI Certificate – 7 days- Basic Certification
- Import Export Code – 1-2 days
- TAN Number – 7 days
ADVANTAGES OF PROPRIETORSHIP FIRM ---
Small Taxes - Sole Proprietorship firm has no legal existence, therefore Individual Income tax slab rates are applicable on the proprietorship firm as ITR filed on the Proprietor's PAN Card basis.
No Monthly Compliances – Except Regular GST, Sole Proprietorship firm has no need to file any monthly Compliances.
Less Expensive - As Compared to other business registrations like private limited company, Sole Proprietorship is less expensive.
Easily Conversion – Sole Proprietorship firm can easily be converted in to One Person Company, Private Limited Company, Limited Liability Partnership etc.
Less Compliances – Sole Proprietorship firm has less Compliances unlike Private Limited Company or Limited Liability Partnership etc.
DISADVANTAGES OF PROPRIETORSHIP FIRM ---
Non- Existence of Limited Liability – Sole Proprietorship Firm has no any Limited Liability like Private Limited company or One Person Company, Consequently in the event of losses in business, Proprietor has to pay by selling his personal assets to Creditors.
Non- Existence of Separate Legal Entity – Sole Proprietorship Firm has not any Separate legal entity like Private Limited company or One Person Company, Consequently it has no legal status in the eyes of law.
Absence of Proper legal Act – Since Sole Proprietorship firm has no any special ACT, it has no specific Certificate like Private Limited and others Entities.
Non- Transferability – Sole Proprietorship firm is a single owner concept and hence it cannot be transferred to other owners.
Absence of Perpetual Existence – "Members may Come, Members may Go, but Company goes forever " this principle is not applicable on Sole Proprietorship firm, in the case of death of Proprietor, it is closed.
Any Person, who have attained the age of 18 years, can easily start a Proprietorship firm with the following documents—
- Passport Size Photograph
- Firm Name
- Firm Office Address
Sole Proprietorship firm has less compliances, the following details of compliances are as follows---
- GST Return Filing monthly or quarterly basis (If GST Certificate has taken)
- Preparation & Filing of Income Tax Returns
- Preparation of Financial Statements i.e. Balance Sheets, Profit & Loss Accounts etc.
VAKIL KARO has the expertise to comply all the compliances related to Sole Proprietorship Firm.
CAN A COMPANY START SOLE PROPRIETORSHIP FIRM?
Sole Proprietorship firm can only be Started by a "Natural Persons" like Ram, Shyam etc. and an Artificial like a Company can not start the Sole Proprietorship firms, hence Sole Proprietorship firm can only be registered by the natural Person.
IS IT MANDATORY TO OPEN A CURRENT ACCOUNT OF SOLE PROPRIETORSHIP FIRM?
All Business has its own Separate Current Account, no any business can be operated by saving accounts, hence sole proprietorship firm should also be operated by the separate current bank account to maintain its daily routine transaction and good keeping of business records.
VAKIL KARO also supports to opening a bank account a free of cost.