Sole Proprietorship Business is the choice of every small businessperson as it is the easiest form of business to start in terms of expenses and legal compliances both.
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What is Sole Proprietorship?
Sole Proprietorship business is owned and governed by one person only. It is not a separate legal entity as the owner is solely responsible for the business. This is why it is known as One-Person-Business. It has become the most simplified and easy business form. Only an Indian citizen and resident of India can establish a Sole Proprietorship Business.
What are the benefits of Sole Proprietorship?
Easy to start
It is easy to start as the sole proprietor is not required to enter into any legal arrangement with anyone else. Moreover, it does not have to call meetings or maintain books of accounts and other legal compliances.
No Minimum Capital
There is no minimum capital prescribed to start a sole proprietorship business.
Easy to control and manage
The Sole Proprietor has the sole authority to make all the business decisions. So it is easily controlled and managed because there is only single owner.
Less Tax Compliances
Sole Proprietorship business has less tax compliances as compared to other forms of businesses. Sole Proprietor has to file tax only once in a year. In addition to less tax compliances, sole proprietorship can easily file the tax by reporting the income and losses and then the owner can fie the tax of the business with his personal income tax.
Set off of Losses
One of the takeaway advantages of the Sole Proprietorship Business is the owner files the tax of the business with his personal tax thus he can set-off the losses of the business from his Personal Income.
No Sharing of Profits/Losses
All the income generated from the Sole Proprietorship business solely belongs to the owner of the business. Likewise, if the business incurs losses from the business then the same has to be borne by the owner only.
What do you need to Register as a Sole Proprietorship?
Proprietorship firm registration documents-
- Aadhar Card of the Proprietor
- PAN Card of the Proprietor
- Bank Account
- Registered Office Address
How to register a Sole Proprietorship in India?
There is no specific registration prescribed for Sole Proprietorship to start a business as it is not mandatory to register a Sole Proprietorship business with government to start it. But it is always suggested to register a Sole Proprietorship in order to avail the benefits attached with registration from the government for smooth functioning of business. Proprietors can register their Sole Proprietorship Business under different laws as per their needs and following are the prevalent methods to register a Sole Proprietorship –
Proprietorship Firm Registration online
Registration as MSME– MSME Development Act, 2006
Registration under Shop and Establishment Act License
The point to note here is that the proprietor must give utmost importance to the nature of business and what benefits it want to take from the government while deciding the registration method. Similarly, a business has to get the GST Registration if the annual turnover of business exceeds the prescribed limit given under GST Law.
What is the process to start a Sole Proprietorship?
- Decide the business name.
- Decide the location of the business.
- Get the business license to operate the sole proprietorship business.
- Create a Bank Account in the name of business/Proprietor.
One person absolutely manages the sole proprietorship business. If you are willing to start your Proprietorship then register your business with Manthan Experts under Professionals guidance.