Sole proprietorships are quite common terms these days. When an individual executes various business projects and is the sole business entity that gets represented via the brand and the services, the company in question is a sole proprietorship. The company and the person are not separate from each other; in other words, the identity of the individual represents the business. But sole proprietorship provides several advantages like flexibility in operations, lower tax rate, etc., and hence it could be one of the most promising first steps for businesses worldwide.
There are times when a business does not have an authoritative collective that governs its actions. Instead, the same is done by a single person. A sole proprietorship is controlled and administered by a single owner, and often reflects the unregistered businesses that are owned and managed by a single person as well. In India, a sole proprietorship is one of the most popular, growing, and trending businesses. Most micro and small businesses operating in the unorganized sectors are sole proprietorships.
Proprietorships are easily established. They contain the least amounts of regulatory constraints and compliance requirements for operations. When entrepreneurs are venturing into businesses for the first time or when small businesses are operating with few clients, then sole proprietorships are the ideal way to kickstart their initial stages. Sole proprietorships can be incorporated in just fifteen days. Therefore, these are some of the most preferred forms of business for small traders and businessmen in the unsystematic sector.
Features of Sole Proprietorship Firm
Sole proprietorship firms have some great advantages and features that make them well suited for initial business setup. Here are the features that make them so enticing:
1. Very easy to form
Sole proprietorships are very easy to form, require minimal documentation.
2. Minimal compliance
With a sole proprietorship, the tax compliance and other compliance are at a bare minimum. In most of the cases, the owner's PAN and firm's PAN are the same and one needs to file just ITR-3.
3. Easy to wind up
There are no tall dissolution proceedings needed in case of dissolution of a sole proprietorship.
4. Lower tax rates
The income of the sole proprietorship and the owner are considered the same. Hence same tax laws and slabs apply, providing a huge tax advantage. Sole Proprietorship Formation Packages All you need to do for registering a Sole proprietorship is to read and understand the sections below. Provide us with the documents, avail a package, and relax!
Sole Proprietorship Registration Fee in India
All you need to do for registering a Sole proprietorship is to read and understand the sections below. Provide us with the documents, avail a package, and relax!
Save upto 5% cost on this package
(inclusive of all taxes)
Name Search report
Registration under shop & establishment Act or GST, any one of them
Here is a simple list of the criterion and documents that one might require to form a sole proprietorship:
Any person having valid PAN & Aadhaar and being 18 years of age can start a sole proprietorship Firm
No Minimum Capital required
Self Attested Copy of Pan Card
Self Attested copy of Aadhaar Card/Passport/Driving License/Voter Identity Card
Passport size photographs
Self Attested Copy of Bank Statement/Telephone Bill/Mobile Bill
Mobile and email ID
Document For Registered Office
Electricity/Water bill pertaining to the proposed registered office
Copy of rent agreement (if the office is running from a rented property) or,
Sale Deed (in case property is owned)
Frequently Asked Questions (FAQs)
Frequently Asked Questions (FAQs) My Legal Clinic believes in answering your questions. We know that as a new business owner you would have certain levels of anxiety and doubts about how the legal business environment works, well don't worry, read our FAQs, they have been put here to answer all the usual questions that you might have about forming a sole proprietorship.
Who should go for a sole proprietorship?
People who are just beginning their business journey or those who provide specialized services where their own intervention determines the fate of the business can go for it. Professionals like freelancers, bookkeepers, accountants, and even small shop owners can opt to register their business as a sole proprietorship.
What are the benefits of getting a sole proprietorship registration in India?
We have already addressed this question in the main section of our web page, however, to make things even clearer, there are many benefits associated with a sole proprietorship firm. First and foremost is the ease of registration. You won't be required to furnish a tall list of documents too. It's very easy to wind up or suspend your business operations too.To explore more benefits of sole proprietorship registration in India feel free to talk to us.
Do I have to furnish any capital?
That's the beauty of sole proprietorship, there are no minimum capital requirements whatsoever.All you have to do to start the business is to get your sole proprietorship registration in India done properly. After it is done you are good to go.
Can I open a current account in my firm's name?
Yes, once your sole proprietorship registration in India is done, you can open a current account with any bank of your choice. Connect with us for that! We can help you by pointing in the right direction here.
Will I be directly liable for the business?
Yes, in the case of sole proprietorship the owner and business are not separate entities but one. Any issues with the firm's operation would have direct legal consequences for you.
Can I get Sole Proprietorship firm registration done online?
The short answer to your question would be a Yes! The registration process is fairly simple at the first glance, however in reality the case is a bit different. You can always visit the government portal or the website of your local municipal authorities to get more information the process. You might have to connect various separate entity to get things in perspective.
The process is complex, and this we are saying with our experience. You have to first create your legal identity and furnish address proof, in some cases proper demonstration of the business structure is also required. So, it would be wise to hire our services to get things done here. Sole proprietorship registration is best left to the professionals, that is if you want a quick resolution to your needs. They would also help you with the sole proprietorship registration fee in India, we are mentioning it here as the fees vary slightly from region to region. On a holistic note sole proprietorship registration fee in India is generally very low and within reach of most of the people.
Is running a proprietorship business recommended?
It depends on your particular business objectives. We recommend sole proprietorship registration to freelancers, consultants and other small business persons. For people who are just testing waters with their business idea, going for sole proprietorship registration is the best way ahead. There are no annual turnover requirements and you can file income tax for the business without hassles.
On the flip-side you and your business are the same person in the eyes of law, there is no separate identity so the legal liability for the business is on the extreme side here. You would still need a tax audit done annually and if the turnover exceeds the limits as prescribed by the law then you would also have to go for GST registration. Filing income tax return however is a tad bit easier when compared to other forms of business models.
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