Sole Proprietorship
Proprietorship refers to a type of business organization where one person owns a particular firm.A sole proprietorship is also known as the sole trader, individual, entrepreneurship which denotes a type of enterprise that is owned and run by one person. And there is no legal distinction between the owner and business entity. The sole proprietorship is one of the easiest types of business in order to establish or take apart in the business field due to a lack of government regulation.
- No minimum capital requirement
- Lower Registration Cost
- Less legal formalities to comply
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Overview
For a newly growing entrepreneur, businessman, trader etc. the best option is setting up a sole proprietorship. Features like low cost, easy to establish, less compliance level and government interventions etc. urges many individuals to to start their business as sole proprietorship. There is no minimum capital requirement. The owner is the only risk bearer in a sole proprietorship. Also, he is the one who enjoys all the profits with any other stakeholders. In legal terms, the business and the owner are one and the same. There is no separate legal identity.
Benefits of Sole Proprietorship
Want to start a business of your own with low capital and high benefits and with the least cost of registration? Then you are at the right stage.
- They are easy to establish
- There is no limit to the number of people you can hire
- You have complete control as owner
- Sole proprietorships are the stepping stone to incorporation
- The entity itself does not have to pay income tax, only the proprietor needs to pay
- Record keeping is easy
- Easy to start and dissolve
- All profits and losses to the proprietor
- You can make all the decisions
Registrations
You can consider availing any of the following registrations for your newly started proprietorship.
Trade license: A trade license is a document that gives permission to the applicant to commence a particular business or trade in a particular area. It ensured that the business or trade is carried by obeying all the standards of safety as issued by the State Municipal Corporation. It protects the residents from being affected by health difficulties.Continue reading for knowing more about Trade Licence.
Shop and establishment License: Shop Establishment registration required while establishing any commercial place. It is relevant for every new shop or establishment to get it registered under the Shops and Establishment Act.Continue reading for knowing more about Shop and Establishment registration
GST Registration: GST registration is mandatory for businesses having interstate supplies, ecommerce services etc. For other businesses, GST registration is based on the threshold of turnover in a year. Continue reading for knowing more about GST registration
Udyam Registration: Udyam Registration also known as MSME Registration is nothing but a government registration that is provided along with a recognition certificate and a unique number. This is to certify small/medium businesses or enterprises.Continue reading for knowing more about Udyam registration
Import Export Code: It is issued by the Director General of Foreign Trade. Any person starting a venture for International trade of Export and Import and for any foreign transfer on account of business, IEC number is mandatory.Continue reading for knowing more about IEC
Documents required
- Aadhar card
- Pan card
- Bank account
- Registered office proof
- Rent agreement and NOC from landlord (If rented)
- Electricity or any other address proof (if self owned)
What after Registration
You did it!! You have registered your own Sole Proprietorship, so what comes next?? Accovet from experience understands that registration is only the beginning.
We provide a comprehensive post registration kit once the registration is complete; we have outlined the various requirements, its applicability to your sole proprietorship. We keep true to our word; we provide our clients a range of supporting services for setting up their business, from opening of bank account to assistance for Credit line up. Please go through our services or give us a call to discuss your specific requirement.
Business Advisory: The entire gamut of advisory functions is covered by us. We offer Taxation, operation, regulatory and restructuring advisory services, development strategies, economic impact analysis, forecasting and modelling, market and feasibility analysis, business economic related consulting, etc.
Annual filings and periodical returns: Accovet helps you to stay in confirmation to these laws by coordinating and filing the Annual filings and other periodical returns under GST Regime on monthly, quarterly and yearly basis as and when applicable.
FAQ’s
Q: Can Sole Proprietorship change into any other entity in future?
Yes, Sole Proprietorship can change into Partnership, One Person Company, LLP, Public Limited Company etc.
Q: Is it mandatory to file ITR?
Yes, it is mandatory to file ITR irrespective of the annual turnover by the proprietor.
Q: Is it mandatory to have GST registration?
When the sole proprietor has earned upto 75,000 in a financial year, then it is not mandatory. But above that it is mandatory to have GST Registration.
Q: Can a minor start a sole proprietorship?
Starting a sole proprietorship business is not feasible and not valid due to incapacity of minors to enter into agreement.
Q: Are you personally liable for your sole proprietorship?
Yes, you are personally liable for your sole proprietorship.If you cannot pay your debts, your personal assets like automobiles, properties, etc. can come into play. For this reason, you should be careful in how you set up your proprietorship. Additionally, consider securing adequate insurance coverage for your risks and liabilities.
Q: How is a sole proprietorship different from other company structures?
Sole proprietors are the cheapest business type when it comes to operational and other costs. They are the least complex of the legally recognized business structures. They are exempt from mandatory state registration laws. Sole proprietorships don’t shield individuals from business related debts or liability. Sole proprietorships don’t require a tax filing separate from personal income.
Q: Time taken for the registration of sole proprietorship?
It depends on the correctness of the documents shared.
Q: What is the act of sole proprietorship?
A sole proprietorship does not have any governing law to protect the rights of a sole proprietor. The owner is personally liable for all the debts and liabilities of the business. If the business does not have enough assets to pay off the debts and liabilities then the owner will be personally liable for it.
Q: Is there any special registration for proprietors?
No, there is no registration for proprietors other than registration as a proprietorship.
