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Proprietorship Registration

 

Proprietorship is a popular type of unregistered business entity owned, managed, and controlled by one person. Most of the micro and small businesses operating in the unorganized sectors prefer registering a Proprietorship.

Sole Proprietorship is simple to start and has very few regulatory compliance requirements for conducting the operation. Proprietorship registration is ideal for entrepreneurs who are getting into the business for small businesses with few clients.

Who is a Sole Proprietor?

A proprietor is the owner of the Sole Proprietorship business. It is not a corporate or legal entity. The proprietor and the Proprietorship are the same legal entity.

The PAN and other documents of the proprietor are the basis for obtaining all the registration and licenses. The proprietor is held personally liable in case of any liabilities in a business.

RELATED GUIDES

How to start a Proprietorship in India?

Registering a Proprietorship firm in India requires no formalities or registration. It is necessary to obtain a business license as required by the state/central government. Further, if the business name is unique, then it is better to Register a Trademark.

  • 1

Business Licenses

Irrespective of the type of entity, business licenses are a must for any permit. For any applicant, before registering a Proprietorship in India, it is necessary to understand the regulatory framework which surrounds the activity he wishes to undertakes and obtain relevant licenses. From the respective Local, state, and Central Government authorities.

  • 2

Tax Registrations

It is necessary to obtain Tax registration from the relevant Tax authorities, which are based on the type of activity the Proprietors perform.

This includes GST registration, Professional tax registration, and ESI/PF registration.

  • 3

Trademark registration

As there is no registrar for Proprietorship in India. Proprietorship can usually be operated under any name unless the name doesn't conflict with any trademark registration and other rules and regulations.

If a person is investing enough time and money in the Proprietorship or if the business and wants the goods and services offered by him to be identified exclusively, it is always recommended to get a Trademark registration.

What documents are required for registering a proprietorship in India?

The entire process for proprietorship registration can be completed online. You will just have to upload the following documents:

  1. Identity Proof - Aadhar & PAN Card
  2. Address Proof - Latest Bank Statement
  3. Passport size photos

IndiaFilings can help you in registering a Proprietorship in 5-7 working days.

Post Incorporation compliances for Sole proprietorships in India

Like LLPs and private limited companies registered in India, proprietorships must file income tax returns. As the proprietor and the proprietorships are the same, the Proprietorship and the proprietor's income tax return filing would be the same.

Under the Income-tax Act, all the proprietors below the age of 60 will file ITR only if the total income exceeds Rs. 2.5 lakhs. If the proprietor is over 60 years and below 80 years, he should file ITR only if his income exceeds Rs. 3 lakh.

Proprietors over the age of 80 years are required to file income tax if the income exceeds Rs. 5 lakh.

At IndiaFilings offer expertise in Income tax return filings for several small and medium-sized proprietorship firms across the country. Get in touch with an IndiaFilings Tax Expert to file the Income-tax return for your Proprietorship today.

Audit for Proprietorship

An audit will be required for the proprietorship firms if the total sales are over Rs. 1 crore during the financial year.

In a professional case, an audit is necessary if the total gross receipts are more than Rs.50 lakhs during the financial year assessment.

Also, an audit is required for any proprietorship firm under a presumptive taxation scheme irrespective of turnover if the income claimed is lower than the deemed profits and gains under the scheme.

Audit for Proprietorship for income tax purposes must be conducted by a practicing Chartered Accountant.

ITR for Proprietorship Firms

Proprietorship firms are required to file Form ITR-3 or Form ITR-4-Sugam.

Form ITR-3

Form ITR-3 can be filed by a proprietor or a Hindu Undivided Family carrying out a proprietary business or profession.

Form ITR-4-Sugam

Form ITR-4-Sugam can be filed by a proprietor who would like to pay income tax under the presumptive taxation scheme. A presumptive taxation scheme is designed to help ease the compliance burden of small businesses by assuming a set profit margin on the business or profession's total income.

Filing a Proprietorship Firm Tax Return

The income tax return of a proprietorship firm in ITR 3 or ITR V Sugam can be filed online using the proprietor's digital signature or manually.

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