Sole Proprietorship Registration
Sole Proprietorship refers to an entity run and owned by one individual wherein, there is no difference between the owner and the business. Sole Proprietorship is the easiest form of business done in India since it isn’t governed by any specific laws.
A sole proprietorship can operate under the name of its owner or else do business using a fictitious name. It is a popular form of business in India, because of its simplicity of set up and nominal cost. Proprietorship falls under the category of unregistered business.
Sole Proprietorship Registration can be done in 3 ways:
- Register under the Shop and Establishment Act.
- Get a Udyog Aadhaar under the Ministry of MSME.
- Get a GST registration.
Documents Required for Sole Proprietorship Registration
- Director PAN Card
- Passport Size Photo
- Bank Account Statement (for 6month)
- Digital Signature
- Director Identity Proof (DL/Passport/Aadhar Card/PAN Card)
- Address Proof (Bank Statement/Telephone Bill/Electricity)
- Registered Office Address Proof (Electricity Bill/ Telephone Bill/Gas line Bill/Property Ownership Documents)
- No Objection Certificate(NOC)
Advantages And Disadvantages Of Sole Proprietorship
Advantages of Sole Proprietorship
Easy to Start
A Proprietorship business needs no registration. Therefore, it is one of the easiest to start with no formalities. However, after starting up the Proprietorship, it is relatively harder to open a bank account or obtain a payment gateway in the name of the business – since more registrations may be required.
No Restrictions on Business Name
Since the name of a Proprietorship is not registered, a Proprietorship can choose to have any name – as long as it does not infringe on a registered trademark. However, since the name is not registered, any other person can also use the same business name unless trademark registration is obtained.
A Proprietorship with less than Rs. 2 lakhs of income is not required to pay any income tax, as Proprietorship are taxed as the individual owing the business. However, once, income of the business exceeds Rs. 10 lakhs per annum, there are no major advantages for a Proprietorship in terms of taxation.
Disadvantages of Sole Proprietorship
- There is an unlimited liability of the proprietor. He is personally liable for all the transactions he enters.
- If something happens to the sole person taking care of the business, there is always the threat of business shutting down.
- Due to a single person managing the business, there is always difficulty in raising capital.
Proprietorship Registration Process
A sole proprietorship firm doesn’t need any specific registration, but the owner is suggested to urge some essential registrations for better operational functioning of the firm. The registrations required for a proprietorship firm are:
- MSME Registration: It is not compulsory to urge an MSME (Small and Medium Enterprise) registration, but it improves the probabilities of the business to urge loans and helps in other legal matters. The MSME registration are often done through a web registration process on MSME official website. this is often an easy process and makes it easy for the only proprietors.
- Shop and Establishment Act License: Shop and Establishment Act License isn’t mandatory for all sole proprietorship firms but most of the firms need to obtain this license, as per the local laws of the region of the business. The Shop and Establishment License is issued by municipal party. This license is given supported the amount of employees working during a company. The registration process depends state-wise and business owners got to check the precise state-wise website for the registration.
- Goods and Services Tax (GST) Registration: Goods and Services Tax registration is important only, if annual turnover is quite Rs 40 lakh and Rs. 20 lakh for businesses operating in North-eastern states. GST registered number is additionally essential, if the business owner wants to sell products online on e-commerce portals, like Amazon, Flipkart, eBay, and more. it’s important to notice that GST registration isn’t mandatory for sole proprietorship firms. Getting GST registration will help the business owner to stay his/her taxation in restraint throughout all the transactions made within the name of the proprietorship firm.
- Office Address Proof: A registered office address proof is important for several procedures which are essential for the functioning of the business. If the office is during a rented property, the rental agreement and a NOC from the owner of office are often used because the office address proof. If the entrepreneur owns a office, the electricity bill issued by the municipal corporation or the other office ownership papers can work as office address
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