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Sole Proprietorship

When a business is owned by one person, it is a sole proprietorship firm. It is the simplest form under which a company can operate. 


Overview

What is a Sole Proprietorship?

When a business is owned and governed by one person, it is called a sole proprietorship company. This type of business can be incorporated in fifteen days and hence makes it one of the most popular types of business to begin in the unsystematic sector, specifically among merchants and small traders. For a Sole Proprietorship business, registration is not required as it is identified through alternate registrations, such as GST registrations. However, its liability is unlimited and it also doesn’t have perpetual existence.This business does not have any separate identity under the law. It can also be operated under the name of its proprietor.

Why Should You Register For A Sole Proprietorship?

A Sole Proprietorship provides maximum privacy to its owners and has an easy establishment and operational process.

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Benefits of a Partnership

Minimum Compliance

For Sole Proprietorship , there is no need for an auditor to be appointed or, if the company is still in the process of registration or incase unregistered, annual accounts filing with the registrar is not necessary either. When compared to LLP, annual compliances are also fewer. Further, taxes depending on turnover, service and sales tax also need not be filed in General Partnerships.

Simple To Begin

General Partnerships can begin simply with an unregistered deed of the partnership within 2-4 business days. However, having registration for the same has its own perks and advantages. The primary advantage for having a registered firm is that it will allow you to book lawsuits in courtrooms opposing another business or the business associates in the firm for the administration of rights addressed in the Partnership Act.

Comparatively Economical

In comparison to LLP, a General Partnership is much cheaper to begin. Even in the longer run, it will still work out inexpensive as the compliance requirements are very minimal. For example, there is no need for an auditor. Therefore, Home businesses still opt for this, although it offers unlimited liability.

Checklist Items for a Sole Proprietorship Registration

  • A certificate/license issued by Municipal authorities under the Shop & Establishment Act.
  • The license issued by Registering authorities like the Certificate of Practice is issued by the Institute of Chartered Accountants of India.
  • The registration/licensing document is issued in the name of the proprietary concern by the Central Government or the State Government Authority/ Department, etc,
  • The banks may also accept the IEC (Importer Exporter Code) issued to the proprietary concern by the office of the DGFT as an identity document for opening of the bank account etc,
  • Complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated and acknowledged by the Income Tax Authorities,
  • The utility bills such as electricity, water, and the landline telephone bills in the name of the proprietary concern,
  • Issue of GST Registration/Certificate.

Documents Required

  • Address and identity proof
  • PAN card, KYC documents and
  • Rental agreement or sale deed (in case of Shops & Establishment Act Registration).

Documents Required For Opening A Current Account

  • Proof of the existence of your business
  • Shops & Establishments Act Registration
  • PAN card
  • Address and Identity proof