Well...we will answer this
question. But first, let’s understand what a proprietorship is. It is an
unincorporated business owned by a single person. It is not a legal entity
subjected to taxes. In a sole proprietorship, the owner himself pays personal
income tax based on the profits he earns.
It is said that it is
simple to establish a sole proprietorship in India as there is no legal
distinction between your business and you. Any small business or
entrepreneurship like a local grocery store, art studio, and IT consultation
services can come under sole proprietorship. So basically, when you start
offering services or selling goods, you become a sole proprietor. Moving to
question, we would say yes, you can register a proprietorship at your house
address. Sole proprietorships like small-scale artisans, online service providers,
consultants, and others who require just a simple office set-up to run their
business can register their proprietorship at their home address. This way, you will avoid legal obligations and cut back
unnecessary expenses like office space rent.
The Ministry of Corporate
Affairs (MCA) of India has made the provision to enable small scale businesses
and entrepreneurs to register their proprietorship at their respective home
addresses.
This way, more people are
encouraged to start their own business and register themselves legally.
Registration process:
Registering your business
as a sole proprietorship is very simple. Select a business name and a location
for operating your business. You can then start a bank account in the name of
your business, provide the required documents, and start functioning
legally.
Besides registering your
business as a sole proprietorship, you can also register it as SME, or get a
Shop and Establishment Act License, as these, will be beneficial while applying
for loans. However, these registrations are not compulsory at all.
You can also register your
business under GST based on your annual turnover. However, the taxes on sole
proprietorship is calculated based on the owner's income from the business'
profits.
Documents required for registration:
If you are planning to
register a proprietorship at your home address, then make sure you have the
following documents in hand before proceeding:
● Aadhar card
● PAN card
● Bank account details
● Registered office proof
If you have rented your
house, then you will need a NOC from the landlord and rental agreement
documents as proof. On the other hand, if you own the property, you will have
to submit address proof, electricity bill, and other similar documents during
the registration.
Characteristics
of a Proprietorship:
The following are the
common characteristics of a sole proprietorship:
● The most distinct feature
of a proprietorship is that it mostly has a single owner who funds the entire
business from his wealth or borrowed capital.
● In a proprietorship, the
owner, proprietor, manager, and the business itself is a single entity. There
is no legal distinction between a proprietorship and its owner.
● It has unlimited
liability. The proprietor is liable for the debts of the business.
● A proprietorship is
usually a small business with a sole trader and limited area of operation.
● A sole proprietorship
requires no legal formalities to start, manage, and dissolve the business.
Advantages of registering a proprietorship at your home address:
The following are the
advantages of registering a proprietorship at your home address:
● It eliminates office
space rent and reduces the cost of maintenance.
● It is more viable and
reachable.
● Any correspondence by
customers can reach your doorstep.
● You can be available
24X7.
● You can spend more time
with your family while still being able to enhance your business.
● It reduces legal
formalities and obligations.
● You always have the
option of changing the place of business without changing the registered
office.
Frequently
asked questions:
1. Is the sole Proprietorship Registration mandatory?
According to Indian law, sole proprietorship registration is not mandatory. However, if you wish to open a separate
bank account in your business's name, you will have to register your
proprietorship. The government will not issue a new PAN card for your business.
2. Is it mandatory to have ownership of my working space/office?
No. You can register a
proprietorship at your home address irrespective of its ownership. Make sure to
provide the necessary documents like NOC and rent agreement while registering
your proprietorship if you have rented your space.
3. How long will it take to
register my sole proprietorship?
It will take about fifteen
days to complete the registration process, provided you submit all the required
documents.
4. What are the
disadvantages of registering my proprietorship at my home address?
● It might not give the
best impression to your customers.
● It can lead to privacy
breaches as the address is set out for public access.
● It can lead to the
overlapping of your business life and private life.
● In case of dispute, the
creditors may end up coming to your doorstep.
● Your address might get
reviewed by company archives.
5. How is a one-person
company different from a sole proprietorship?
The key difference between
a one-person company and a sole proprietorship is that the former has limited
liability and requires mandatory registration.
An OPC is a separate legal
entity, unlike a sole proprietorship, and has a single member.
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