1. Who can start a sole proprietorship?
Any Indian citizen with a current account in the name of their business can start a sole proprietorship. Registration may or may not be required, depending on what business you are planning to establish. However, to open a current account, banks typically require a Shops & Establishments Registration.
2. What documents are needed for opening a current account in the name of my sole proprietorship?
To open a current account, you need proof of the existence of your business. Most banks will ask for a Shops & Establishments Act Registration. In addition, you will need a PAN card and address and identity proofs.
3. How long does it take to establish a business with Sole Proprietorship?
A sole proprietorship business does not take more than 15 days to open-up and get running. This simplicity makes it popular among the small traders and merchants. It's also much cheaper, of course. This is the other reason why it's the most widely used business structure.
4. What businesses are commonly run as sole proprietorships?
Most local businesses are run as sole proprietorships, from your grocery store to a fast food vendor, and even small traders and manufacturers. This is not to say that larger businesses do not operate as sole proprietors. Even some jewellery shops are sole proprietors, but this is not recommended.
5. What documents are required for starting a sole proprietorship?
To start a sole proprietorship, you would need address and identity proofs, PAN card, all KYC documents and rental agreement or sale deed (in case of Shops & Establishment Act Registration).
6. A side from a current account, is there no need for any other registration?
This depends on the business you're in. If you're running a departmental store, then you would also need a GST Registration once your turnover is over Rs. 5 lakh per annum. If you're running a air-conditioned restaurant, you would need a GST Registration.
7. Can I apply for any of these registrations online?
The proprietorship registration controlled by the central government -- GST, for example - can be availed of online, whereas the state-government-controlled ones may or may not be. In some technologically advanced states, such as Karnata, they are, whereas in others they may not be.
8. What if I wish to convert from sole proprietorship to private limited company or partnership?
You can always choose to do so. The procedure is a little tedious, but it is possible. It is very common for sole proprietors to convert into partnerships.