Company Registration is a paramount step for any business organization to protect & secure business rights. There is various forms/constitution of businesses available that one can register with. But among all Sole Proprietorship is a popular type of unregistered business institution owned, managed, and operated by a single person.
The sole proprietorship is the “One Man Business Entity”. All the investments for the Sole Proprietorship business are done by the single proprietor who bears all the losses and enjoys all the profits. The overall control of the business, as well as its management, is in his hands. He can appoint individuals for conducting the business, but the ownership will rest solely with him.
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 micro and small businessmen, traders or merchants. The majority of the unorganized sectors prefer registering a Sole Proprietorship.
Generally, it does not require any registration as such as it is identified through alternate registrations, such as GST registrations. It is not a corporate or legal entity. The PAN and other documents of the proprietor are the basis for obtaining all registrations & licenses. The proprietor is held personally liable in case of any liabilities in a business.
Who Can Go for?
Any individual who wants to start a business from home or on a premise with a minimum amount can opt for the Sole proprietorship business type. It can be started within the time span of 10–15 days.
Benefits of Sole Proprietorship
➢ Easy to Start
Sole proprietorship Registration is very simple, to begin with, and can be set up within 15 days with the help of a PAN Card. Only GST Registration is required in the first place.
➢ Full Control of business
Proprietorship firms are owned and operated by just one person. Control of the business is solely in the hands of the single proprietor/owner and can make all the decisions as no partners are involved to consult
➢ Recognition as a Supplier of Goods & Services.
The Proprietor will be legally recognized as a Supplier of Goods & Services. He can also claim the Input tax credit (tax paid on the purchase of goods & services)
➢ Easy compliances
The sole proprietorship business can be started easily by just one person and has the minimum compliance that is required to be adhered to to get it incorporated. It doesn’t require any additional compliance in most cases.
➢ Reasonable and Inexpensive
Very little investment is required in Sole Proprietorship. Anyone who wants to start a business with low funds can go for this as no investments are involved. Also, there is no requirement of hiring an Auditor.
➢ Employment Opportunities
The owner of the Proprietorship firm is himself self-employed and also creates various employment opportunities which will contribute to fixing the Indian unemployment problem
➢ Easy Closure
Dissolution or sale of the Proprietorship firm is very easy. As there is no legal distinction between the proprietor and the proprietorship firm, not many regulatory formalities are required for the closing of a proprietorship which undoubtedly saves time.
Documents Required for Sole Proprietorship
The entire process for Sole Proprietorship registration can be completed online. The following documents are required to be uploaded by the person:
➢ Identity Proof — Aadhar & PAN Card
➢ Address Proof — Latest Bank Statement, Electricity Bill etc
➢ Passport size photos
Checklists required for Sole Proprietorship
➢ Proprietor’s PAN Card.
➢ Name & address of the business.
➢ Bank Account in the name of the business.
➢ Certificate/license issued by Municipal authorities under the Shop & Establishment Act of respective state
➢ GST Registration (If the business turnover exceeds Rs.20 lakhs.)
Income Tax Return must be filed on your behalf annually as a sole proprietor. If you are registered under GST, then you also need to file your GST Return. A sole proprietor should also deduct TDS and file a TDS return if liable for Tax Audit. ITR 3 or ITR IV Sugam can be filed online using the proprietor’s digital signature or manually.