About : A business that is owned and managed by a single person. There is no such thing as registration with any statutory Law like Company Law / LLP Law / Partnership Act etc.;
Proprietorships are recognized by other registrations, such as a service tax registration or GST or MSME or Shop and Establishment Act.
Features of Sole Proprietorship :
- Unlimited Liability : Just as a partnership, a sole proprietorship has no separate existence. Therefore, all debts can only be recovered from the sole proprietor.
- The owner has unlimited liability with regard to all the debts. This should heavily discourage any risk-taking, which means that it’s suited to only small businesses.
- If you plan on running a business that requires a loan or may end up paying penalties, fines or compensation, it’s best you look into registering an One Person Company (OPC).
- Easy to Start: There is no separate registration procedure for proprietorship. All you need is a government registration relevant to your business.
- If you’re selling goods online, a proprietor would only need a tax registration (GST). Therefore, starting up as a sole proprietor is relatively easy.
- Sole proprietors will be taxed on their personal income tax rate.
Disadvantages of Sole Proprietorship :
- Unlimited personal liability.
- Difficulty in raising investment capital.
- lack of financial control.
- difficult to find outside investors to fund sole proprietorship.
List of Documents/Information required to Register :
- Name of the Proprietor Firm ;
- PAN Card ;
- Aadhaar Card ;
- Rental Agreement on Business name if available ;
- Utility Bill – Electricity Bill copy of the address ;
- Email id and phone number.
Step-1 : Open a Current Account in Bank with your Proprietorship Firm name. (For Bank KYC, Two proofs required from Step-2)
Step-2 (Legal Certificate) : Get register under any 2 of the below :
- GST Registration certificate ;
- MSME Certificate ;
- Shop and Establishment Act ;
- IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of bank account. Etc.
AUTHOR : CS LALIT RAJPUT (CLICK HERE TO VIEW PROFILE)