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The definition of ‘Company’ signifies any enterprise which is formed under the Companies Act, 2013. The procedure of registration of a company in India relies upon the type of the company.
When a business or firm is held and governed by one individual it is referred to as a sole proprietorship firm or company. In this Proprietorship firm form of business a single individual takes care of and controls the total operation and functioning of the business. The proprietor of the business is the only individual to enjoy the profit of the business and he has to bear the losses.
There is no specific law that directs the sole proprietorship firm. Proprietors of such corporations have unlimited business liability. This comprises that the proprietor’s personal assets shall be attached in order to fulfill business liability claims. It is not possible in order to transfer the ownership of a Proprietorship firm from one individual to another.
For a proprietorship firm or business, Proprietorship Firm Registration is not essential as they are recognized by alternate registrations such as GST registrations. Though its liability is unlimited and it also does not have a continuous presence.
A proprietorship registration is needed for the individual-owned business for doing business, hence it is recommended to get the given registrations in order to run the business function smoothly and legally. An individual could select any form of registration from the below:
• Shop and Establishment Registration under the laws of the individual states
• Registering as SME
• GST Registration
The documents required for a Proprietorship Firm registration are;
• Aadhar Card
• Registered office proof (for Rented Property: Rent agreement and NOC from a landlord/ For a Self-owned Property: Electricity bill or any other address proof.)
• PAN Card of the proprietor
• Bank Account
The steps to be followed for Proprietorship Firm Registration in Delhi include;
1. Applying for PAN. If an individual already has one this step is not needed.
2. The next step is naming the business which is required before registration of the Proprietorship Firm in Delhi.
3. There is no formal registration needed, but the next step is to open a bank account in the name of commerce for Proprietorship Firm Registration in Delhi.
4. An individual may also register as a Small and Medium Enterprise (SME) as per the MSME Act, but it is not compulsory, however, it is beneficial towards being registered under the same.
5. An individual could also register for GST if the turnover goes beyond Rs 20 lakh. For registering under GST, an individual has required the following documents which include PAN card, Photo, and Aadhar Card of the proprietor; Proof of business place (Electricity bill/ rent agreement) and a Bank statement copy (first page for confirming bank account number, address and IFSC code).
6. An individual could also get a Shop and Establishment registration done.
Obtain DSC & DIN — eStartIndia will apply for Digital Signature (DSC) and Director Identification Number (DIN) (about 1 – 2 working days)
Name Approval — eStartIndia will apply for company name approval (about 2 – 3 days)
MoA and AoASubmission — eStartIndia will prepare MoA and AoA(about 5 – 7 days)
Certificate of Incorporation, PAN, TAN, Bank Account — eStartIndia will file SPICeform for obtaining Certificate of Incorporation (CoI), PAN, TAN & Bank Account (about 10 – 12 days)
Congratulations! Your work is done. You can download your Incorporation certificate and Incorporation kit from your dashboard after company incorporation. We also send your Incorporation kit & certificate on your registered email.
An Indian National with a current bank account on a business name is eligible for forming a sole proprietorship Firm. Generally, banks ask a customer for a Shops and Establishments license prior to opening a current bank account.
A sole proprietor has unlimited liability towards the business as a sole proprietorship is not a separate legal entity.
A sole proprietorship Firm is most suited for unorganized sectors with preference given by small and micro businesses such as grocery vendors, fast food vendors, etc.
The key advantages of a sole proprietorship firm are less compliance, Ease of start, Less Tax and less costing.
No. A sole proprietorship firm does not have any government-mandated registration requirements. The registration of this type of business entity is usually obtained by the acquisition of registration related to tax under the business name.
There is no mandatory qualification for an individual to be a director of a Public LTD. Co. and any natural person above the age of 18 can become a director.
Yes. A sole proprietorship firm can be converted to a Partnership or Limited Liability Partnership as per due procedure at a later stage.
As per tax laws, the income from a sole proprietorship firm is treated as the personal income of the sole proprietor as a sole proprietorship is not a separate legal entity.
For starting a proprietorship firm, you need only one person is required and it has only one promoter.
It is not necessary to prepare audited financial statements each year. However, a tax audit may be required based on turnover and other criteria.
Yes, you can convert your Proprietorship Firm into a Pvt. Ltd. Company or LLP. The Procedure is a little complex.
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