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Proprietorship Firm

Key Highlights

  • Proprietorship firm is neither regulated by any law nor registered anywhere
  • The incidental laws, rules & regulations applicable to a business such as income tax act, GST, food licenses or any other need to adhered
  • There is no requirement to obtain separate pan card for firm & individual pan card is valid in furtherance of business
  • Proprietorship firm are suitable & opted by small individual entrepreneur

Proprietorship firm is most popular, common & convenient form of organisation to start and run business in India. An individual can start a proprietorship firm in a single day. Any name can be taken unless & until it is undesirable and permitted by law.

However, with introduction of One Person Company which is registered entity with limited liability, a new door has been opened for small businesses as it provides a corporate identity.

Advantage & Benefit of Registered Partnership Firm

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Easy & Convenient to Start

No Approval for Name

Proprietorship firm can take any name unless & until its undesirable & prevented by law.
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Less compliance

No annual filing required.

Tax relief

Basic threshold exemption & slab rate as per income tax applicable.

Convenient to Shut Down

Since, its unregistered there is no prescribed procedure to close or wind up the business.

Compare Options

BasisPrivate Limited CompanyLimited Liability PartnershipOne Person CompanyPartnership FirmSole Proprietorship
Business Formation10-15 Days10-15 Days10-15 Days21 Days1-2 Days
Act / LegislationCompanies Act 2013LLP Act 2008Companies Act 2013Partnership Act 1932Not Applicable
Registering AuthorityROC under MCAROC under MCAROC under MCARegistrar of Partnership under Local SDM OfficeNot Applicable
Legal StatusArtificial judicial person with limited liabilitySeparate legal entity with limited liabilityArtificial judicial person with limited liabilityPartners are personally liable with unlimited liabilityPromoter is personally liable with unlimited liability
Members RequiredMinimum - 2
Maximum - 200
Minimum - 2
Maximum - No Limit
Just One Person with one nomineeMinimum - 2
Maximum - 100
Just One Person
Suitable ForStart-upsProfessional firmsIndividual promotersFamily businessesSmall businesses
Taxation BenefitsCertain benefits EfficientBenefitsLowestIndividual slab rate
Compliance ApplicabilityAudit Report, Annual Return, other compliance as per actAnnual Return, Audit report if turnover exceed Rs. 40 lac's in FY or contribution exceeds Rs.25 lacsAudit Report, Annual Return, other compliance as per actAudit Report only as per Income Tax ActAudit Report only as per sec 44AB of Income Tax Act
Investors InclinationMost attractiveNot preferableUnlikelyUnlikelyNo way
Perpetualty
YesYesYesNoNo

Package & Pricing

Documents for Online Registration of Proprietorship Firm

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PAN of Proprietor

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Aadhar of Proprietor

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Photo of Partners

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Address Proof of business

FAQ

Where sole proprietorship firm is registered?

Sole proprietorship is an unregistered entity and there is no regulation or authority for its registration. No name approval is required and liecense specific to business are obtained to run sole proprietorship. For example, shop-establishment license, MSME registration, GST registration or FSSAI to directly run business.

What tax rate is applicable on proprietorship firm?

Legal status of proprietorship firm is as that of individual. Individual slab rate is applicable for proprietorship firm.

Can a proprietorship firm be converted into limited liability partnership firm?

Yes, a proprietorship firm can be converted into a limited liability partnership firm.

Can a partnership firm be converted into private limited company?

Yes, a proprietorship firm can be converted into private limited company.