Overview

Sole Proprietorship is a type of enterprise in which the business is owned and managed by an individual. In a sole proprietorship business there is no legal difference between the owner and the business. Putting it another way is not the only proprietary legal entity. An owner is responsible for taking away the debts of the business. Sole proprietorship is a superior and popular commercial form. It is simple and easy at a nominal cost.

The only proprietorship is a convenient and easy way to start a business in India. It is neither treated as a corporation nor possessed by any company and business that is the owner / director / shareholder of a single entity.

Some common examples of proprietorship business are such as chemist, salon, grocery etc.

A person who wants to sell his products or services can run his business as a sole proprietor and enjoy the rights granted to a registered legal company. Most entrepreneurs find it to be an ideal business unit and register their business under it. The loss or gain of the company is treated as loss or gain of the person and the income of the company is treated as the income of the owner as per the Income Tax Act ..

Registering a sole proprietorship business is a digital process that can be done with the help of a specialist. However, a person interested in registering as a sole proprietorship is required to fulfill certain basic requirements such as opening a bank account in the name of a business entity, etc.

Registration

A person can choose any one of the following options for registration:

Benefits

Each business structure has its advantages. Some distinct advantages of a sole proprietorship business are:

• Individual’s Investment

  To start a sole proprietorship business, a person who acts as a sole proprietor can invest his personal assets, other financial resources or borrow money to start a business activity.

• Owned

  The entire business is controlled by one person and he is the owner of the firm. In addition, a person can transfer ownership of his own free will or through a final will.

• No profit or loss sharing

  All income or loss or debt generated by the company belongs to the owner, and he cannot share it with anyone else.

• Unlimited Liabilities

  This feature sometimes works as a drawback. Since the business and the owner are not separate identities, the owner's personal property can be used to pay off the business loan.

• Low formalities

  Easily in the beginning, sole proprietorship comes with some formalities before and after registration.

• Control power

  The controlling power is in the hands of one person, and he is not accountable to anyone else. The person should be able to use his skills, expertise and intelligence to carry out business activities.

Required Documents

• Proprietor Base:

  The owner of the proposed firm will have to submit a scanned copy of his Aadhaar card. Aadhaar card is necessary to register any business in India. Unless the PAN card is linked to the Aadhaar card, a person cannot file income tax returns. If you have an Aadhaar card of Don & rsquot or your information does not match the PAN card, please correct before submitting.

• Proprietor's PAN card

  Apart from Aadhaar card, PAN card is also a mandatory document for proprietary business registration. The PAN card is issued by the Income Tax Department of India which has a unique PAN card number. Details of all required documents must match PAN card details ..

• Current Bank Account Details

  If the owner has a PAN and Aadhaar card, he is responsible for opening a bank account in the name of his company. In addition to these documents, he will need proof of identity and address. Documents regarding GST registration also require opening of a current bank account.

• Office Proof

  An owner can carry out his business activities at any place of ownership or rent. He has to provide proof of his registered office, the documents worked as proof are:

  In case of Rented Property: Lease / Rent Agreement with NOC from Landlord.

  Further, for the registration purpose of the proposed firm some registrations given as follows are required

  Further, some registrations for registration purpose of the proposed firm are as follows:

• SME Registration

  As per the provisions of the MSME Act, a person is required to register as an SME (Small and Medium Enterprise). For this, you have to submit an online application. However, this is not mandatory, but is beneficial to the company, especially at the time of needing a loan at a lower interest rate. The government has introduced various schemes for the improvement of SMEs registered under the MSME Act.

• Shop and installation registration

  The person must have a shop and installation license according to local laws. It is issued by the municipal parties based on the number of workers / employees in the firm.

• Registration under GST GST registration is mandatory for carrying out business activities in India. If you are doing business online, you will still need a GST number. GST registration can be done in 5 working days with the following documents:

   

  • PAN Card of the proprietor

  • Aadhar Card of the proprietor

  • Passport size photograph of the proprietor

  • Office proof

  • Bank Statement copy that contains bank account number, IFSC code, and address

• Post Compliances

  • One has to file annual Income Tax returns on time.

  • One has to file his GST in case they have GST registration

  • If liable for TAX audits, the individual should deduct TDS (tax deducted at source) from employees income and file TDS returns

Why should someone choose a sole proprietorship firm?

A sole proprietor is the best option for entrepreneurs who want to handle everything on their own. Despite this, it has various benefits ..

• Provides flexibility in carrying out business activities
• One of the oldest and easiest forms of business structures is
• Single Arm Control
• It is easy to start and stop
• Hazel Free Trade Structures with Very Low Compliance
• Self-Accountability
• Being your own boss means that you are not accountable to any shareholder / director
• Decision making power
• Don’t have to share your income and profits with anyone
• No disputes between the members

Some Difference

Both entities can carry out their business activities as an owner or shareholder or director with only one person. Nevertheless, there are different points of difference between them ..