Proprietorship Firm
NOW YOU CAN GET YOUR PROPRIETORSHIP BUSINESS REGISTRATION EASYLY FROM YOUR HOME IN A VERY AFFORDABLE PRICES STARTING FROM RS. 999/- HURRY UP….
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- Definition
- Inclusions
- Documents
- Features
- FAQ’S
About Proprietorship
Proprietorship business is commonly known unorganized sector of business in India whose play a crucial role in Indian Economics. A business owned, organized, running, managed and under control of a single person is called as proprietorship business.
The various examples of small entities whose running their business activities around us are proprietorship business. The proprietorship business segment is providing maximum employment in India.
What are the pros and cons of Sole proprietorship form of Business/ Organisation ?
The pros and Cons of Sole Proprietorship form of Organisation are as follows:
PROS:
CONS:
- Sole proprietorship is the most hassle- free form of legal organi-sation
- There is no sharing of profits
- There is no sharing of control or decision-making
- Don’t have to become liable for acts of others as in case of a partnership where there is mutual agency of partners being bound for acts of other partners
- Sole proprietorship has the option of following cash basis of accounting There is on compulsion to follow accrual basis of accounting
- NO meetings or filings as in the case of companies /LLOS.
- No requirement for audit except when required for Income tax or GST
- No headache of explaining source of capital funds or angel tax as in case of private limited companies.
- Presumptive taxation regime under section 44AD or 44DA or 44AE can be opted for under the Income-tax Act, 1961 without hassles of maintaining accounts and getting them audited under section 44AB of the Income-tax Act. 1961
- Exempt from Alternate minimum Tax under Income –tax Act. 1961 if adjusted total income does not exceed 20 lakhs.
- Individual or HUF is not required to deduct TDS on payments to residents under the following sections of the Income –tax Act. 1961 if his turnover do not exceed 1 crore in case of business and 50 lakhs in case of profession
- Section 194A –Interest on Securities
- Section 194C –payment to Contractors
- Section 194 I Rent
- Section 194J- Fees for professional or technical services
NO liability for compulsory tax audit under section 44AB (a) of the Income –tax Act. 1961 upto 10 crores turnover if 95% of receipts and payments of business are by cashless means If the 95% cashless norms cant be complied with then threshold limit for exemption from compulsory audit will be turnover of 1 crore
- Not suitable for startups as only LLPs partnership firms and private limited companies are eligible for DPLLT recognition and income –tax benefits for startups.
- Cant raise huge funds. Limited scope of business
- Unlimited liability of proprietor.
- No per existence as in case of companies.
- Not suitable for very large businesses as proprietor’s maximum ,marginal rate of the of with surcharge could be as high as 43% for incomes above 5 crores (39% with effect from assessment year 2024-25 if new regime under section 115BAC of Income-tax Act opted for by taxpayer).
- No provision for seamless conversion to company or LLP under Companies Act, 2008.
- There is no provision for seamless conversion of a sole Proprietorship into a One Person Company.
- Sole Proprietorship /MSMEs cannot avail Pre-packaged Insolvency Resolution process /CIRP under IBC .2016 if they are debt-stressed since IBC ,2016 is yet to be extended to sole proprietorships.
- Not suitable for foreigner
What are the differences between sole proprietorship and one person company (OPC)
Both sole proprietorship and OPCs are one man show or one woman show. However there are lot of differences that must be noticed between the two
Basis of Difference | Sole Proprietorship | OPC |
|---|---|---|
Legal Identity | Not a distinct legal entity separate from its sole owner Owner and business treated notionally as separate entities only for accounting purposes | OPC is an entity distinct from its sole shareholder |
Business Liability | Sole proprietor has unlimited liability for the debts of the business | Limited liability of sole shareholder |
Succession | No perpetual succession | No perpetual succession |
Adoption for Professionals | Can be adopted for professionals like CAs, CS, Advocate | Not suitable for practice of profess- sions like CA as Companies are barred from practicing as CAs. Also since OPC is an artificial person it cannot carry on a profession. |
For Startups | Not suitable for startups as sole proprietorship startups cannot obtain DPIIT recognition and cannot avail benefits to startups under startup India Scheme | Suitable for startups as OPC is a private company and can be recognized by DPIIT in Startup India Scheme |
Audit Compliances | NO requirement to get accounts audited unless section 44AB of Income-tax Act is attracted | Compulsory requirement to get accounts audited irrespective of size of the company |
Number of Compliance | Less compliances | More compliances |
Type of registration for proprietorship business
- Udhyam Registration under MSME.
- Business Registration No. (in Rajasthan)
- Registration under Shop and Establishment Act,
- GST registration (Mandatory if Turn over more than 20 lakh per annum)
- Other registration if required
Finally if you are choosing business legal form as proprietorship firm
START WITH LEGALMAN CALL OR WHATSAPP -
Mob. No. 9983390888, 9785734036
Write us: Office@legalman.in
Write us: Office@legalman.in
Advantage of Proprietorship business
Easy to form a business
Less legal compliances
Cost saving compare to other type of business registration
Slab benefit under Income tax.
Documents required
PAN Card of proprietor
Aadhar Card
Name and address, and business activity of Business firm
Other documents as per type of registration
Time Frame for business registration
Our dedicated team is ready to work for your, our team never miss-out your work. Generally the proprietorship business registration will takes a time from 1 day to 7 working days according to type of business registration, to know more please post your query.NOW YOU CAN GET YOUR PROPRIETORSHIP BUSINESS REGISTRATION EASYLY FROM YOUR HOME IN A VERY AFFORDABLE PRICES STARTING FROM RS. 999/- HURRY UP….