Setting Up a Proprietary Concern: Key Steps and Requirements

A sole proprietorship is the simplest and most common form of business ownership. It is not a separate legal entity but rather an extension of the owner, who is personally responsible for all business liabilities. A sole proprietorship can operate under the owner’s name or a chosen trade name, which does not create a legal distinction from the proprietor.

This form of business is popular due to its ease of setup, minimal cost, and straightforward operations. A sole proprietor only needs to register their name and obtain the necessary local licenses to start operations.

Advantages of a Sole Proprietorship:

• Easy, quick, and inexpensive to establish.
• Minimal ongoing formalities and compliance requirements.

Disadvantages of a Sole Proprietorship:

• The owner bears unlimited personal liability for all business debts and obligations.
• Raising capital is challenging as selling business interests is not an option.
• The business ceases to exist upon the owner’s death or incapacitation.
• Creditors can sue the owner personally to recover debts.

Despite these drawbacks, the simplicity of forming a sole proprietorship is a significant advantage. There are no formal filings required; the business comes into existence simply by engaging in trade or service activities.

Essential Registrations for a Sole Proprietorship:

1. Registration under the Shop and Establishment Act.
2. Udyam registration under the Ministry of MSME.
3. GST registration under the Goods and Services Tax Act.

Shop and Establishment Act Registration

The Act covers commercial establishments, hotels, restaurants, theaters, and public amusement venues. Shops include retail and wholesale outlets, service providers, and warehouses.

Registration Process:

• Submit an online application within 30 days of starting operations.
• Provide employer and manager details, establishment name, and address.
• Pay the prescribed fee.
• Upon verification, the Inspector issues a registration certificate valid for 5 years.
• Display the certificate prominently at the establishment.

Udyog Aadhaar Registration (MSME)

Udyog Aadhaar is a 12-digit unique identification number provided by the Ministry of MSME. It offers official recognition and helps businesses gain access to various benefits. Registration is simple and can be completed online within two working days.

GST Registration

GST registration provides an official business identity and replaces VAT and Service Tax registrations. However, compliance with GST regulations, including tax collection and return filing, is mandatory once registered.

GST Applicability:

• Service providers: Registration is required if turnover exceeds INR 20 lakhs.
• Traders and manufacturers: Registration is mandatory for turnovers above INR 40 lakhs.

Documents Required for Registration:

1. Proprietor’s PAN Card.
2. Passport-sized photograph.
3. Aadhaar Card.
4. Address proof (Rental/Lease Agreement, Voter ID, Passport, etc.).
5. Recent utility bill of office premises.
6. Bank statement of the proprietor.

Additional Registrations Based on Business Needs:

1. TAN Registration
2. Import Export Code (IEC)
3. Professional Tax Registration
4. PF & ESIC Registration
5. Factory License
6. Trade License
7. Food License
8. 24/7 Holiday Declaration
9. APEDA Registration
10. Pollution Control Board Registration
11. DOT/OSP Registration
12. Trademark Registration
13. RERA Registration

If need any assistance in formation of Proprietary concern, please feel free to reach us at reachus@msassociates.pro or call us on 080-41633750 or 9880542668.