A sole proprietorship is a company where one individual owns and runs the whole operation. It can be incorporated in less than 15 days and is India’s oldest and most basic business structure. This makes it one of the most widely used types of business structures among independent small business owners. A proprietorship firm business is typically exempt from registration requirements since it may be identified through other government business-related registrations, such as goods and services tax (GST). Individual business and one-person company registration are synonyms for sole proprietorship firm registration.
A sole proprietor may operate more than one company. From the standpoint of a tax return, it is easiest to comprehend how to operate many firms under a single sole proprietorship or tax ID. In a sole proprietorship business form, the firm owner is accountable for all obligations and loans taken out by the company. No legal distinction exists between the proprietorship firm and the owner because neither is a separate legal entity. This is the benefit of operating as a sole proprietorship, especially given that there are ways to own many enterprises.
Registering Multiple Sole Proprietorships in India
Legal Requirements
There are no processes or written registrations in India to register a proprietorship business. But in this case, the necessary conditions are as follows:
Business name availability
Your given name would be the official name of your business if you were a sole proprietor. A “doing business as” option, or DBA, is what you choose if you want to operate under a different name. It’s sometimes called an assumed, fictitious business or trade name. Francine Smith, for instance, could carry on business as Fran’s Fabulous Footwear, which is legal if the name is registered with county or state organizations.
A single taxpayer identification number (TIN) or employer identification number (EIN) can be used by a sole proprietor to operate multiple DBAs for unrelated firms. To find out if you can use several DBAs, it is always advisable to check with your county or state government.
Obtaining a unique PAN
You must obtain a permanent account number (PAN) card from the income tax division after choosing the name of your business. All businesses in India must have a PAN card, which is a unique identification number.
Taxation considerations
Individual income tax liability
A sole proprietorship must meet specific tax obligations to comply with the country’s or territory’s tax laws where it conducts business.
Income tax: A sole proprietorship is taxed on its net income, the revenue earned less allowable deductions. The owner reports the revenue and expenses on his or her personal income tax return.
GST registration
You must register for the goods and services tax if your annual turnover reaches Rs. 20 lakhs. You can register for GST online through the GST portal.
Limitations and Restrictions
Ownership companies frequently operate many businesses. As a sole proprietor, you are not limited in how many enterprises you can run.
Benefits and drawbacks of registering multiple sole proprietorships
Benefits
- Minimal document requirement
- No complex legal formalities
- No need to wait for a longer duration to kick start your business
- Easy to wind up
- You get independent control, and there is no corporate tax liability
- Compliances are also less
- You earn all the profits, and no one else can interfere with your business decisions.
- You get to keep your business information confidential. Furthermore, you can make quick decisions.
Drawbacks
- Limited managerial ability: It is operated by a lone proprietor who might be technologically and administratively incompetent.
- Limited capital: Due to the involvement of a single owner, its equity is constrained.
- Unlimited liability: The capital of the business is entirely the lone proprietor’s responsibility.
- Expansion potential is limited: Future expansion and development of it are limited.
- Uncertain existence: Its existence is intrinsically connected to that of its owner. It can be ended when the owner dies, suffers from a mental disease, declares bankruptcy, or has a disability.
You are permitted to manage many businesses if you are a sole proprietor. A Shop Act or Gumasta license is all you need to establish a single proprietorship, and you are free to use the same name for many businesses.
Can a sole proprietor have multiple locations?
Single-location businesses are possible for sole proprietors. However, the owner must comply with all state registration and company license requirements. You will normally need to register with state and local government organizations, like a Department of Commerce or a tax commission if you conduct business in many states. Typically, there is a small charge and some documentation involved. You’ll also need to register any DBAs the sole proprietor uses for tax purposes.
Note: Each state has its requirements for income taxes. Before starting a business in another state, please consult a tax expert to understand your tax requirements fully.
The registration process for multiple sole proprietorships
The following steps explain how to incorporate several sole proprietorships:
- Applying for a PAN card
- The next stage is to maintain a name for the sole proprietorship business after getting a PAN card or if the proprietor already has one.
- The following action is to open a bank account in the company’s name. This bank account will be used for all company transactions.
- Even though no specific registration is needed to start a sole proprietorship firm, it must get a few fundamental registrations to operate. The following fundamental registrations are necessary for a sole proprietorship:
- The business owner must receive the Registration Certificate the state’s Shops and Establishments Act requires.
- If the sole proprietorship’s annual revenue reaches Rs. 20 lakhs, it should additionally register for GST.
- Although it is not required, it is advantageous for a sole proprietorship to register as a small and medium enterprise (SME) under the MSME Act.
Required documents
The following are the required documents in this regard:
- A PAN card
- A bank account
- Relevant licenses
- GST registration certificate
- Registered office proof
Post-registration obligations
You must submit an annual income tax return as a sole proprietor. You must also file your GST return if you are registered for GST. If a sole owner is subject to a tax audit, they should additionally deduct TDS and file a TDS return. You must adhere to specific tax and accounting laws in India if you are a sole proprietor. First, if your annual revenue exceeds a specific amount, you must register for GST and receive a PAN.
Additionally, you must keep accurate accounting records, file your income tax and GST forms on time, and pay all appropriate taxes. In addition, depending on the nature of your business operations, you might need to acquire particular licenses and permits. It is crucial to seek advice on these requirements from a qualified accountant or tax counsellor.
Conclusion
In conclusion, numerous sole proprietorship registrations in India have many advantages, such as simple formation and affordable compliance. To ensure smooth business operations and avert legal and financial repercussions, following the appropriate laws and compliance standards, such as getting the required licenses and permissions, keeping accurate accounting records, and completing tax returns on time, is essential.
Final thoughts and advice
You can also contact Govche India Pvt. Ltd.’s Kanakkupillai, a web portal situated in Chennai that specializes in registering multiple sole proprietorships online in India, to register your multiple sole proprietorships. They simplify the registration procedure and ensure compliance with pertinent rules and regulations by offering thorough guidance and help throughout the registration process. Your experience will be hassle-free thanks to their services, which will allow you to confidently and easily begin your entrepreneurial path. Stop waiting and begin registering your numerous sole proprietorships online with Kanakkupillai immediately.
