A Proprietorship Firm is the simplest and most common form of business structure, particularly suited for small businesses or self-employed individuals. It is a single-owner business where the owner has full control and responsibility over the operations, liabilities, and profits of the business.Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Simple Proprietorship Formation Process
With CAFilings excellent support at best price, Business Registration is a simple process. Required documents for registration are generated online.
What is Proprietorship Formation?
A sole proprietorship, also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one natural person and in which there is no legal distinction between the owner and the business. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. This means that all of the assets of the entrepreneur are subjected to business risk. In case of insolvency of the debts of the individual firm, he is liable to third parties with all his possessions, including personal.
A sole proprietor may use a trade name or business name other than his, her, or its legal name. They may have to legally trademark their business name if it differs from their own legal name, the process varying depending upon country of residence. It could be form within 15 days, which makes it very popular among the unorganised sector, particularly small traders and merchants. There is no such thing as registration; proprietorships are recognised by other registrations, such as a service tax registration or sales tax registration, etc. the only thing to do is to open a current account with bank.
Easy to Start
The proprietorship business does not require any formal registration as such, it can be started at will. Shops & Establishment Registration, Professional Tax Registration, Vat or Service Tax etc are certain registrations which are common to all other forms of business which also applies on the proprietorship. Setting up a proprietorship is comparatively low in cost.
Taxation
Proper books of accounts should be maintained and at the end of the financial year a balance sheet and profit and loss account should be prepared. Income of proprietor shall include the taxable income of the business and he shall file information in his Income Tax Return before 31st July after discharging all tax liabilities of the proprietorship business.
Capacity to Sue and to be Sued
A Proprietor can start a proprietorship with separate name which over a period of time acquire value and goodwill. Care should be exercised while deciding the name, that it shouldn’t be in conflict with other trademark. CAFilings specialists shall be providing you with free consultancy on Name Check and also assist you for how to protect Business Name, its Logo, Punchline etc.
Decision Making
There is no separation of ownership and control in proprietorship business as proprietor is the person who controls the business without any interference. In comparison to that of private Limited company, Limited Liability partnership (LLP), Partnership the decision making in case of proprietorship is relatively fast process as their the management and control rests with separate body of individuals.
Less Paperwork
The paperwork and other formalities are less in comparison to corporations to establish a proprietorship, which can be created at the will of its owner. Licensing and other registration requirements in the states in which proprietorship business starts, need to be comply as well as local regulations and municipal level regulations need to be complied.
Time is on your side
In a proprietorship business proprietor do not have to consult or report to any other person as he is everything in the business. Also at the same time on the comfort level of the proprietor the continuance of business depends, and it can be passed down to the owner’s heirs.