As you may be aware that to start a proprietorship firm, you do not need to obtain any specific license or registration; in fact, there is no registration prescribed under any law. However, when you start any business, there are tax and local laws that may apply in your case. Now the question is how to start it; we will take you through the wise step process of setting up a sole proprietorship business in the following paragraphs.
Consider Protecting the IPR of your business: The business name, Logo, Domain Name & Punchlines are examples of trademark, irrespective of the size of your business you should consider registering it under the Trademark Act, 1999 with the registrar of the trademark. The registered trademarks enjoy the protection of a court of law when someone else interferes with or copies your business name or brand. Nowadays, it has become common for people to copy successful brands, make small changes, & take advantage of someone else’s brand. We can help you to protect your trademark by filing the trademark application within 24 hours of placing the order with us for Registration of Trademark. Similar to a trademark if you have conceived some literary work, artwork, musical work, etc.
Open a Bank Account: For the opening, a current bank account for your proprietorship, you should approach a banker near your place of business. For opening the bank account of the proprietorship, the banker will ask KYC of the proprietorship along with two entity proof in the name of the proprietorship firm. The list of documents required for opening a bank account for the sole proprietorship firm is mandated by the reserve bank of India and is mandatory. Out of the list provided, you will find that most of the documents that are mentioned in the list of documents are applicable for an existing business, here is the list of entity proofs that may be applicable for a startup proprietorship firm is as under:
ITR of Proprietor With Firm Name: One of the documents that are acceptable as entity proof is the copy of the income tax return filed by the proprietor for the previous year, where the income from the sole proprietorship is shown under the head Income From Business and Profession and the in the business description section the name of the sole proprietorship is mentioned in the ITR Form filed for the proprietorship. This option may not be available for the new startups, however, in case you have not filed the last year ITR yet then, you may use this as an entity proof document after filing the last year ITR with the business name.
Shops & Establishment Certificate:The registration under the shops and establishment act is mandatory for all the business that operates under a municipality (Other than villages), the local labour department administers it. The registration or enrollment certificate issued by the labour department under the shops and establishment act is accepted as one of the entity proof for opening the bank account for the proprietorship.
GST Registration: The GST registration is applicable based on the nature of supply and the turnover, following are the situation under which the GST Registration becomes mandatory; however you may always take optional registration under the GST. Once gst registration is obtained, the business must file the GST Returns on time to avoid the penalty of non-filing. We provide end to services for GST Registration and GST Return Filing.
In the end, we would like to invite your attention on the Benefits of a Sole Proprietorship Form of Business; It is easy and most suitable for tiny or very small business that is being run for family income.
Easy to Start: The best part of a proprietorship is that you can start it at any time without obtaining any prior registration certificate of incorporation. We call it a business at will so that you may start the sole proprietorship at any day at any time without any formality at all. However as said earlier there are several tax laws, Labour legislation and local municipality related law shall apply depending on the location of your business
Taxation: The proprietorship business should maintain proper books of accounts and at the end of the financial year, prepare a balance sheet and profit and loss account. The taxable income of the business is added a separate source of income under the head Income from Business or Profession in the Individual ITR of the proprietor. There is no need to file a separate ITR for the sole proprietorship firm as such. As the income of the sole proprietorship business is added to the individual ITR of the proprietor, hence the advantages of slab based tax rate and the applicable deductions on investments and eligible spends of Section 80C is also available to the sole proprietorship firms. The last date of filing the ITR of a sole proprietorship is 31st July of the year following the financial year.
Business Name: The proprietor (Owner if the sole proprietorship business) can start the Proprietorship Firm with a separate name which over a period of time acquired goodwill and value. While deciding a name, the care should be exercised to check if it conflicts with other trademarks.
Decision making: As proprietorship is owned by a single individual who controls the business, there is no separation of ownership and management in the proprietorship type of business, leading to faster decision making.
Less paperwork: With the ease of creation of a proprietorship which can be created at the will of its owner, the paperwork and other formalities are less in comparison to corporations. However, the sole proprietors will still need to comply with licensing and other registration requirements in the states in which they are operating their business, as well as local regulations and municipal level regulations.
Time is on your side: As stated earlier, the proprietor is everything in the proprietorship business; he does not have to consult or report to any other person. The proprietor can utilise his time as per his discretion. At the same time, business continuity also depends on the comfort level of the proprietor.