A sole proprietorship firm is considered one of the leading business types in our country. It is the most accessible form of business because no specific laws don’t govern it. Sole Proprietorship means a business that one person carries out. The choice-making and management of the business are only applicable to that single person.
It is a single-person single firm registration. The only thing that is often is Open Current Bank Account on the Name of Business, so it is a simple firm that enables doing business in India with Less Compliance and Less Costing.
There is no specific legal registration under any law to set up Sole Proprietorship. But, a person can apply for a few registrations or licenses under various laws to avoid any complicated scenario in future
One can register as a Small and Medium Enterprise (SME) under the MSME (Small and Medium Enterprise) Act. It can also be filed electronically through an online registration process on MSME official website. It isn’t compulsory to register as an SME but highly beneficial for the business because it improves the chances of the business getting loans and helps in other legal matters.
Also, one can get registered under GST if the annual turnover is more than40 lakhs. If you are doing online business, the GST number is required. GST registration through the GST portal. For registering under GST, the following documents are needed
Shop and Establishment Act License is not compulsory for each sole proprietorship firm, but most firms have to obtain this license because of the local laws of the region of the business. The Shop and Establishment License act is issued by the municipality, as this license is given on the basis number of employees working in a company. The registration process depends state-wise, and also, the business owners should keep a check on the specific state-wise website for the registration.
A registered office address proof is essential for several procedures, which is essential to carry out the business. If the place of work is a rented property, then the rental agreement and a NOC from the landlord can be used as the office address proof. If the entrepreneur owns the workplace, then the electricity bill issued by the municipality or any other office ownership papers can be as office address proof.
Advantages of Proprietorship Firm Registration In India
A proprietorship business does not want any registration. Hence it is referred to as one of the easiest ways to start with no formalities. Proprietorship only requires registrations or licenses specific to the nature of business. Any name can be used without approval from the registry
Decision-making lies in hand, single hand as the Sole Proprietorship is managed and operated by a single person; there is no chance of a conflict of ideas or decisions. Sole Proprietors have the rights to do whatever he thinks is correct for the business.
There are various shops in our locality carrying out small business, these are Sole Proprietorships. They do not involve any complexities, and a single person can handle them.
Unlike Companies, Limited Liability Partnerships, etc., where financial statements and audit reports are made public, the financial reports of Sole Proprietorships remain in private hands.
Sole Proprietorship does not require its accounts audited each year under any specific law. The audit depends upon the nature of the business and threshold turnover limits specified for the conduct of the audit.
Sole Proprietorship involves only a Sole proprietor. Therefore no separate tax is required to be paid. Proprietorship with less than two lakhs of income is not required to pay tax, as Proprietorships are taxed as the individual owning the business.
It’s simple to start a small business by forming a Sole Proprietorship with minimum complexities. Sole Proprietorship offers the entrepreneur to focus on enhancing the business rather than focusing on meeting various compliances. Hence, it is a good option for those who want to provide a platform for their business idea and set up their business with minimum investments.
