Overview
What is a Sole Proprietorship?
Overview When a business is owned and governed by one person, it is called a sole proprietorship
company. This type of business can be incorporated in fifteen days and hence makes it one of the
most popular types of business to begin in the unsystematic sector, specifically among merchants
and small traders. For a Sole Proprietorship business, registration is not required as it is
identified through alternate registrations, such as GST registrations. However, its liability is
unlimited and it also doesn't have perpetual existence.
Benefits
Benefits of a Sole Proprietorship
Minimum Compliance
Sole Proprietorships have minimum compliance requirements as they are identified by government
and tax registrations. Therefore, their agreements are confined to yearly filings of service,
sales, or professional taxes.
Simple to Begin
A Sole Proprietorship is simple to begin. One needs to simply have a GST Registration in place.
This business can be set up in 15 days with the help of a PAN card.
Economical
When compared to an OPC or One Person Company, a Sole Proprietorship is economical due to its
minimum compliance requirements, including no need to hire an auditor. One of the main reasons
why small merchants and traders choose this type of companies.
Checklist
Checklist Items for a Sole Proprietorship Registration
- A certificate/license issued by Municipal authorities under the Shop & Establishment
Act.
- The license issued by Registering authorities like the Certificate of Practice IS issued by
the Institute of Chartered Accountants of India.
- The registration/licensing document is issued in the name of the proprietary concern by the
Central Government or the State Government Authority/ Department, etc,
- The banks may also accepts the IEC (Importer Exporter Code) issued to the proprietary
concern by office of the DGFT as an identity document for opening of the bank account etc,
- Complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor
where the firm's income is reflected, duly authenticated and acknowledged by the Income Tax
Authorities,
- The utility bills such as electricity, water, and the landline telephone bills in the name
of the proprietary concern,
- Issue of GST Registration/Certificate.
Registration Procedure
How We Executes A Sole Proprietorship Registration Procedure
Professional Guidance
Our experts give your professional guidance on many of the processes involved in registering your
business as a sole proprietorship, along with registration of service tax, sales tax,
import/export code, professional tax or Shops and Establishments Act.
Vendor Relationship
Our team will connect you with an established vendor who will book your application and also keep
you updated on its status and progress. The vendors we have onboard are well-accomplished and
skillful in managing native registrations.
15 Business Days
Our team will offer full assistance with the registration process. This could vary between 5 and
15 days, depending on the task at hand for the authorities involved.
Document Required
What Are The Documents Required For Registering A Sole Proprietorship
To start a Sole Proprietorship, the following documents are required
- Address and identity proof
- PAN card, KYC documents and Rental agreement or sales deed (in case of Shops &
Establishment Act Registration).
What Are The Documents Required For Opening A Current Account
To open a current account, the following documents are required;
- Proof of the existence of your business.
- Shops & Establishments Act Registration.
- PAN card.
- Address and Identity proof.
FAQs
1. Who can start a Sole Proprietorship?
Any Indian citizen with a current account in the name of his/her business can start a sole
proprietorship. Registration may or may not be required, depending on the type of business that
is planned to be established. However, to open a current account, banks typically require a
Shops & Establishments Registration.
2. How long does it take to establish a business with Sole Proprietorship?
A Sole Proprietorship business does not take more than 15 days to set-up and start functioning.
This simplicity makes it popular among 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.
3. What businesses are commonly run as Sole Proprietorships?
Most local businesses are run as sole proprietorships, from grocery stores to fast-food vendors,
and even small traders and manufacturers. That is not to say that larger businesses cannot
operate as sole proprietorships, they can! Jewellery shops are sole proprietors, but it is not
recommended.
4. Aside from a current account, is there no need for any other registration?
This depends on the business you're in. It is compulsory for any business whose turnover in a
financial year exceeds Rs 20 lakhs (Rs 10 lakhs in the case of North Eastern states) to get a
GST registration. For businesses that are involved in selling goods or services to customers out
of a commercial establishment, it is mandatory to register under Shops and Establishments Act.
Is it cheaper to run an LLP than a private limited company?
Yes, it is much cheaper to run an LLP than a private limited company. Mostly because compliances,
such as an audit, apply to LLPs only after their turnover is sizeable. Most LLPs spend about
half as much as a private limited companies, in their first year on registrations and compliance
work.