What is Sole Proprietorship?
Starting a business under sole proprietorship is easy and convenient. A sole proprietorship is neither a company nor a corporation. The business is owned by an individual. The sole proprietorship firm registration is done with a motive to open a current bank under the name of a small business.
When an individual who owns any products or services establish themselves as the sole proprietor when they starts selling it. Many entrepreneurs are running and selling their product under sole proprietorship.
The income is basically reported as the business income or losses by the owner in his/her individual income tax return.
What is Sole Proprietorship Registration Online?
Sole Proprietorship registration online is completely a digital process and hence you can register your business without leaving from home or office. Generally, a person desirous to establish and profess the business as a sole proprietorship firm requires starting with certain basic requirements such as one need to have a Current Bank Account on the Name of Business to support the ease of doing business.
Starting a business as a Sole proprietorship firm is easy in India with less compliance and less costing.
Sole proprietorship registration is required for the individual owned business and India is toward ease of doing business, hence it is suggested to obtain the given below registrations to make his business function smoothly and legally. You can select any of registration from the below:
- Shop and Establishment Registration under the laws of the respective states
- Registering as SME
- GST Registration
What are the Features of a Sole Proprietorship Firm Registration?
No sharing of Profit and Loss
All the income or loss or any such revenue generated from the sole proprietorship firm business belongs to the sole proprietor only, no sharing of the business profits and losses is followed.
To start the business or to continue operations the capital invested is of that of sole proprietor only, which can be either from his personal resources or by borrowing.
A single person owns the entire business and all the assets and property belongs to the proprietor, there is no separation between the two. All the risk associated with the enterprise is that of the owner
The biggest disadvantage is an unlimited liability. In the event of loss, even the personal assets of the proprietor can be attached.
Less Legal Formalities
This form of business offers ease of commencing, operating and closure of business.
Central control is maintained by only one person. A single person is in charge of all the activities.
No legal distinction between the proprietor and business:
The sole proprietor uses his own skills, intelligence and expertise to operate the business.
Requirements after Sole Proprietorship Firm Registration
- Comply GST Registration rule for Proprietor
- Avail MSME Registration benefits
- Carefully use HAC/SAC Code during GST Registration
- Subscribe Enterslice services for GST Returns Monthly / Quarterly
- Club your all business and other income in your Personal income tax return
Sole Proprietorship Firm Registration Fees
GST registration+ MSME Registration+ Assistance opening of current account Rs. 3500 +GST
GST registration + MSME registration+ Assistance In opening of current account + Trademark registration in one class Rs. 9999 + GST
Documents Required for Sole Proprietorship Registration
Sole Proprietorship isn’t governed by any specific laws it has the minimal and easy compliance.
For Sole Proprietorship registration, the following documents are required:
- Aadhar Card
- Registered office proof
- PAN Card
- Personal Bank Account
The Advantages of choosing Sole Proprietorship Registration in India
- Business secrecy is maintained
- Informed decision making is done and prompt action is followed
- Flexibility of Operations
- Least record keeping
- Accountability is your own
- It is the oldest and simplest form of business.
- No hazel to establish your business. It automatically exists as soon as you start to sell something.
- No second set of business tax forms to complete
- Sole proprietorships have the lowest tax rates.
- No need to publish its financial accounts or any other such documents to any members of the public. Hence a great deal of confidentiality is maintained, which is quite important in the business world.
- The owner drivesthe maximum incentive from the business.
- Not required to share any of his profits.
- Being your own boss system and sense of satisfaction and achievement is achieved
- It acts as a great boost to your self-worth as well.
- Easy star and closure procedure
- Direct control
- Common examples of sole proprietorship business are grocery shop, chemist shops, beauty parlors, fabrication units and so on.
Legal requisites for a sole proprietorship: Taxes, Accounts, Audits, Other legislation
Any revenue which is earned by the sole proprietorship firm is considered as the personal income, for which personal taxes are to be paid. At the same time, there are no additional business taxes. You are required to pay income taxes and advance taxes, based on what you earned the previous quarter.
Now, what all Taxes are required to be paid by a Sole Proprietorship Firm?
Sole proprietorship firm must pay taxes in the same line and manner as other businesses.
In addition to income tax your business must pay the following:
- Collect and pay GST on taxable goods and services sold.
- Pay property tax on any real property (land and buildings) you own.
- If your sole proprietorship firm has employees, you must collect, report, and pay employment taxes.
You have to maintain the proper books of accounts of your sole proprietorship firm.
No such audit is mandatory below annual turnover Rs. 1 Cr, but yes you may conduct your own internal audits, so as to know your defaults and loopholes if any.
Other Legal Requirements for Proprietorship Firm Registration
No statutory requirement is required to register the sole proprietorship firm; however, to advance your business you may require the following registration:
Shop and Establishment Act License
This license is again not mandatory in all the state of India. However, where ever it is mandatory it is obtained according to the local
How to Open Bank account for Sole Proprietorship
- Firstly, obtain PAN for your sole proprietorship.
- Get GST registration certificate.
- You must also have Aadhar Number and PAN.
- Visit any bank for opening an account with them.
- You shall also carry identity proof and address proof.
- You may also require providing other business related documents by the bank.
In case of any kind of assistance from Enterslice expert team or to know more contact.