Proprietorship firm is the most simplest form of the business registration. If you are thinking about starting a business in a particular locality, with less investment and no big plans, you can opt for the registration of a proprietorship firm. Its registration is not done by any particular authority. In order to register a proprietorship firm you can either take GST registration or MSME registration or any other registration with the government authorities on the name of your firm. There is no separate registration procedure for such a business. Proprietorship firm registration happens on the name of the proprietor. The best way to register such an entity is to do goods and services tax registration in their name. Most terms and conditions for the GST registration for proprietorship firms are similar to the other entities. To know more regarding GST registration for proprietorship firms read the complete blog.
What is a Proprietorship Firm?
A proprietorship firm is a kind of business entity which is owned and managed by a single individual, distinct from a corporate entity. Typically chosen by small business owners, it’s ideal for local enterprises like kirana stores or street vendors. The owner has complete responsibility and liability for the business operations. Unlike registered corporations, sole proprietorships don’t need registration under the Companies Act of 2013. However, they must fulfill certain legal requirements, such as GST registration if applicable, and obtaining licenses like Trade License, even though registration under any specific law is not mandatory.
What is GST Registration?
The process by which individuals register with the goods and services tax administration is known as GST Registration. Once a certain sales threshold, referred to as the GST registration limit for goods and services, is met, this registration can be completed. In accordance with the Goods and Services Act of 2017, registration is mandatory. In order to be acknowledged as GST taxpayers, it is necessary. It has to do with imposing taxes on the trade of goods and services. It is comparable to the tax systems of roughly 160 other countries, making it one of the biggest tax reforms in India. With the use of this registration, India hopes to ensure a more efficient and effective tax system by combining various indirect taxes, preventing tax cheating, expanding the taxpayer base, and promoting digital tax practices.
How to get GST Registration for Proprietorship Firms?
Follow the steps given below in order to get your GST registration for proprietorship firms:
- By entering your basic information, create an account and set up login credentials on the official goods and services tax registration portal.
- Fill out Form GST REG-01.
- Provide scanned copies of the necessary paperwork.
- After reviewing the application once, submit it.
- Enroll in GST by paying the necessary registration costs at the time of application submission.
- Now you will receive a mail or verification and also you will get the Application Reference Number (ARN) via mail. Keep that number with you, it will help in tracking the application
- After the above steps now your application will be reviewed by the goods and services department
- If everything finds correct and they will have no problem with your application and the documents attached with the same they will issue your GST registration for proprietorship
Key Documents Required for the Goods and Services Tax Registration
Some of the key documents required for the GST registration for proprietorship firms are discussed here. To start a business, the owner needs to provide certain documents for the Know Your Customer (KYC) process. Essential documents include the owner’s identification, PAN card, and proof of the office or company address. For rented spaces, a No Objection Certificate (NOC) from the landlord and documentation of the leased office are required. A shop and establishment certificate is necessary. In some cases, a certified Chartered Accountant may be required. Additionally, the owner or proprietor must submit income tax returns. Collecting and submitting these documents ensures compliance with legal requirements and supports the smooth establishment of the business.
Right Time to do GST Registration for Proprietorship
For a proprietorship firm falling under the GST threshold limit, obtaining GST registration is mandatory, as per the GST Act of 2017. Once the threshold limit is crossed, GST enrollment becomes essential for compliance, with distinct limits of Rs. 40 lakhs for goods and Rs. 20 lakhs for services. Exceptions outlined in Section 24 of the GST Act specify certain businesses that must register for GST, irrespective of turnover. These include businesses engaged in online trade, those operating across states, and those involved in occasional transactions or liable under the reverse charge mechanism.
Additionally, specific sections of the GST law, such as Section 9 Clause 5 or Section 51, mandate registration for certain entities, including Non-Resident Indians conducting taxable supplies and those responsible for paying GST on behalf of others.
Conclusion
Registering a proprietorship firm is a straightforward process for those looking to start a small business with minimal investment and local focus. While there isn’t a specific authority for proprietorship firm registration, opting for GST registration for proprietorship firms serves as an effective method. This registration is done in the name of the proprietor and involves fulfilling conditions similar to other business entities.
GST registration for proprietorship, mandated by the Goods and Services Act of 2017, is crucial for individuals reaching the specified sales threshold. This tax reform aims to streamline and enhance the tax system in India, preventing evasion and promoting digital practices. Overall, choosing GST registration facilitates compliance with legal requirements and supports the smooth establishment of a proprietorship firm.
