Proprietorship : Procedure,Advantages

Proprietorship:- No frill Business form

Simply when a person runs a business on own name or independently he is known as proprietor or sole proprietor and his business is known as a proprietorship or Sole proprietorship

Advantages

• Easy to start:- Setting up a Proprietorship takes the least time & cost. As Proprietorship registration does not require any special requirement to be fulfilled, it can be initiated at any time. However, if you want to open a Current A/c, You will at least require two registration on your Proprietorship name. Call 8080809061 to know which two certificates you might require. As such, there is no legal requirement of sole proprietorship registration in India.

1. Less legal compliance & proprietorship firm registration: – Being the introductory form of business legal compliances are least, As a proprietor, you need not seek any name or registration as this form of business does not require sole proprietorship registration. Just take required certificates Like VAT services Tax & shop licenses and you are ready to start your business.
2. Less cost of formation and operation:- As compliance are minimal in a sole proprietorship, It cost you less and also regular compliance is not that engaging as in case of Pvt Company or partnership. There is no mandatory audit and filing also the tax audit is required when you cross the turnover as provided in the Income Tax Act 1961
3. Beneficial Tax rate:- Sole proprietorship form of business in India gets many benefits in India. The icing on the cake is that a proprietor gets beneficial treatment, That means he pays less Income tax as compared to other forms of business, Further, he also gets deductions on tax savings.
4. Total control:- As there is no partners or shareholders, A proprietor is a king of his business, He maintains absolute control on the functioning of business and need not to keep everyone in a loop.
5. Perfect for Try out ventures:- If you are planning to try your new idea and don’t want to spend much then Proprietorship may be the right choice for yours.

The flip side

1. Less reliable:- This may not be true however a proprietary firm is not considered as reliable as compared to a company or LLP as there is almost no third party involved, Many Business houses not prefer to give business to a proprietor especially if the proprietor doesn’t have a track record. Hence if your product or services related to corporate or where you need to show a big business image, Prefer to form an LLP or Company and then proceed.
2. Financing:- This is the biggest issue with a proprietor firm, As the proprietor have to take out all the initial capital from own sources, Even Bank don’t prefer to finance a proprietorship firm without any track record. Hence it needs to be taken in mind if your venture requires heavy finance and you planning to finance it from bank or investors better go for LLP or Pvt Company.

Procedure

1. Choose any name: –To start a business in proprietorship you can choose a name. For Example ABC Enterprises
2. Get the important certificate:-Take two certificate which identifies you as a proprietor. Depending on you’re your business requirement you need to take some mandatory
3. Open Bank Account:-some banks even may accept one Certificate of a CA Certificate to open your bank a/c.However, it is taken as secondary documents
4. Get other mandatory certificates:-Depending on you’re your business requirement you need to take some mandatory certificates. Like if you are a service provider you need to take service tax. If you employ People more than 20 than EPF & ESIC no.

Send your business details to info@aktassociates.com and we will guide what are the certificates mandatory for your business

Conclusion

Best for a startup to test the water As easy to start to operate & wind up Not recommended for an established business for high fund requirement It takes several other ingredients to cook a successful Business To know what are those ingredients.