How to Start a Proprietorship Business in India

Why to start Proprietorship?

It is the easiest form of business. Its the easiest way to start your business. Compliances are less. Regulations are less. In short, legal work is less. Unlike other forms. The registration process is easy. One can start a proprietorship at any point of time. Because, it doesn’t need a formal agreement. Also, the maintenance is low. Since there is a single owner, making decisions is quick. Thus, decision making and implementation is a one step process.

 

What registrations are required?

The following certificates need to be filed. Only one is enough. There are 2 types in general. The MSME certificate and the GST certificate. Note that the easiest to get is MSME certificate.  While, GST certificate is slightly more complex. Also, MSME stands for micro, small and medium firms. And, GST stands for goods and Services Tax. Also, getting registered under the MSME act seems like the obvious choice. But, there are always many things to consider. For instance, in case the turnover already exceeds  20 lakhs (services)  or 40 lakhs  (goods). You’ll need to have a GST registration anyways

1.     MSME

MSME act came in 2006. One can register under MSME act; get a certificate start the business. MSMEs are classified in the following 3 types. 

Micro-Firms with investment less than a crore. And, a turn over till 5 crores.

Small-Firms with investment under 10 crores. And, turn over between 5-50 crores.

Medium-Firms with investment under 50 crores. And, turn over till 250 crores.

2.     GST Registration

GST registration is optional for small businesses. However, it is mandatory for larger ones. Because, crossing a turnover is mandatory for filing GST. Mandatory registration is triggered if turnover crosses 20 lakh. On the other hand, for goods, its 40 lakhs.However, also note that many situations require GST registration. Examples of this including dealing in inter state transactions, ecommerce websites etc.

What are the documents needed?
·        For, MSME/GST certificate

1.     A PAN card. That is, a Permanent Account Number. Multiple proprietorships can be registered on a single PAN. Specifically, there is only 1 PAN. In spite of number of firms.

2.     Also, Aadhar Card of the owner. 

3.     Further, a Registered Office Proof. Along with NOC by landlord or rent agreement. Or, an electricity bill. It should be an address proof.

 

Requirements for Opening a Bank Account

1.     MSME/GST certificate.

2.     PAN Card.

3.     Aadhar Card.

To start this kind of firm one needs MSME/GST certificate. As well as a bank account. One can apply for MSME and GST online too.

 

What are the Timelines?

·       MSME registrations are completely online. And it doesn’t even take a day.

·       You can register under GST too. This is a completely online process. However, it takes 7-10 days’ time.

·       Bank Account opening takes a week. But, it might take longer in some cases.

One can do the registrations any time. However, the deadline is within 30 days, for GST. Thus, one should register within 30 days of crossing the turnover.

Summary

Starting a proprietorship is the easiest way to start a business. Moreover, it is  the also simple. Since, the business in managed by a single body. You dont have to share your profits with anyone. Furthermore, the owner has all the rights to make all the decisions. It is the easiest form of business. Legal work is less. Unlike other forms. Therefore, the registration process is easy. One can start a proprietorship at any point of time. Because, it doesn’t need agreement to start. Also, the maintenance is low. Presence of a single owner makes the business handy. Hence, proprietorship is one of the most simplified businesses forms in India.