A Sole proprietorship can be explained as a kind of business or an organization that is owned, controlled and operated by a single individual who is the sole beneficiary of all profits or loss, and responsible for all risks. It is a popular kind of business, especially suitable for small business at least for its initial years of operation. This type of businesses is usually a specialized service such as hair salons, beauty parlours, or small retail shops.
For a Proprietorship, there’s no specific type of registration. Thus it is identified by other types of registrations such as MSME, GST, etc. to name a few. Also, there’s unlimited liability in Sole Proprietorship or Sole Trader Registration.
Package for Proprietorship Firm Registration
For Sole Proprietorship, the following registration are necessary and the business can be identified through such registrations.
Registration under MSME.
The registration can be made by both manufacturer and service firms under as Micro, Small and Medium Enterprise. It is highly beneficial, especially at the time of taking loan for the business. The Government runs various schemes for MSMEs where loans are provided at the concessional rate of interest and even without interest at recession time.
Registration under Shop and Establishment Act
This license isn’t mandatory at all places, but it is required to be obtained according to the local laws. It is issued by the municipal party and is issued on the basis of the number of employees. It prevents involving child labour in the business and the license regulates safety and health of the employees.
The Registration under Goods and Service Act is compulsory if your annual turnover is more than Rs. 20 lakhs. Also, if you are doing online business (like selling through Amazon, Flipkart etc.), you are required to get a GST number. The GST number is compulsory to avail the benefits of the input tax credit.
Benefits of a Sole Proprietorship Firm
Easy to start
A sole proprietorship is easy to start as it requires only simple registrations such as GST, MSME. Also, only simple documents are required such as PAN Card, Aadhaar Card, etc. along with Proof of Address. Due to this fact, a Sole Proprietorship can be started effectively within 5 Days.
One of the main reasons why small traders and merchants choose Proprietorship is because it is economical.
Unlike other legal entities such as One Person Company (OPC) or LLP etc. there are no annual compliances in Proprietorships. Due to this, it is one of the most common forms of business in India, utilized by small traders and merchants especially those operating in the unorganized sectors.
Less Legal Formalities
A single proprietor can enter the business with minimum legal formalities. The legal requirements for formation, operation and closure of a sole tradership business is almost nil, even it does not need registration. Although for the purpose of business, it can be registered with local self-government, and obtain a certificate of registration.
Quick decision making
A sole proprietor has the freedom to make any decision. Therefore, the decision would be prompt as they don’t have to take the permission of others. He/she can have the personal satisfaction associated with working without any guidance or alone. Being only the owner of the business, it allows him/her to keep all the business information to be private and confidential.
- Identity Proof of the applicant like Pan Card, Aadhaar Card or Voter or Driving or Passport etc.
- Address Proof of the Business place Electricity Bills copy or gas bill or phone bill etc.
- Notarized Rental or Lease Agreement of the Business place (in case of business place is rented or lease).
- No objection Certificate from the owner (in case of rented or lease).
- Passport Size Photograph of the applicant.
- Personal Bank Account Cancel Cheque or Bank Statement or Passbook Front Page anyone.