Sole Proprietorship

Want to run your business without the hassle of any partners, shareholders, etc?

Start a Sole Proprietorship with the help of ICI today!

Our Sole Proprietorship incorporation packages start from ₹5,549/- all-inclusive

What is a Sole Proprietorship?

A sole proprietorship firm is a type of business entity that is owned, controlled and managed by an individual person. A sole proprietor has complete control and decision-making power over the business.
Sole proprietorship businesses typically require less paperwork and are easier to maintain than partnerships or corporations. The business owner is responsible for the debts and liabilities, and the accounting and record keeping methods are usually simple and straightforward. In simple words, sole proprietorship is one man business organisation.

An Overview

The Indian government has not established any separate rules and regulations for a sole proprietorship, and there is no registration process. The registration of the business can therefore only be identified on the basis of the tax registration required in the company. These tax registrations may include a GST registration and / or an SSI / MSME registration that must be obtained on behalf of the owner to determine that the owner runs the company as a sole proprietorship. It’s a good option for those who want to provide a platform to their business idea and try out something they want to do with minimal investment.

Advantages

Quick Decision Making
The promoter has complete and direct control over all decision making which ensures quicker business decisions and hence, faster execution.
Easy to Start and Inexpensive
The process for starting a sole proprietorship firm is easier compared to other business structures and can be completed within 1 working day. Registration is cheaper than all other types of organization. Due to the minimum requirement to comply with the rules, current costs and staffing requirements, the running costs and manpower costs are low.
Tax Benefits
The benefits of sole proprietorship is that it prevents double taxation of the firm. You will file returns and pay taxes only in your personal name. There are no separate income tax returns to be filed and no tax to be paid by the firm. The business is taxed at the personal income tax rate instead of the corporate tax rate. This leads to enormous tax savings.

Disadvantages

Unlimited Liabilty
This means in case the business assets are not sufficient to pay of the business liabilities, then personal assets of sole proprietor would be sold to pay off the liability.
Transferability
Any license or registration obtained in the name of the proprietorship cannot be transferred to any other person or entity.
No perpetual succession
A sole proprietorship firm has no separate legal existence. It is dissolved upon the death of a proprietor.
Raising of Funds
A sole proprietorship cannot raise capital by selling stock. The difficulty of raising funds forces the owner to rely on his own savings and loans from friends and family.

Checklist

Sole Proprietor must be a Indian Citizen

Sole Proprietor must be a Resident of India.

Sole proprietor has to be a natural person

Steps to Incorporate a Sole Proprietorship

Step 1: Choose a name for the business.

Step 2: Open a bank account in the name of the business.

There is no formal registration required, but can be obtained through either the following ways:

– Register as a Small and Medium Enterprise (SME) under MSME Act,or

– Register under GST Act, or

– Register under Shop and Establishment Act.

Requisite Documents

Compliance required by Sole Proprietorship

Accounting and Book Keeping
It is always advisable to maintain financial records for business activities of a proprietorship firm on an accrual basis in order to judge whether these operations are generating a profit. However, one can also maintain a cash basis of accounting.
Tax Audit
There is no legal obligation for the dealer to check the accounts (unless the turnover in the financial year exceeds Rs. 1 crore or the total income of the business exceeds Rs. 50 lakhs). In both cases, the Income Tax Act of 1961 requires an audit for the holder.
Income Tax Returns
Income tax returns must be filed by all proprietorship firms having a taxable income. Since proprietorship and promoter are considered to be the same, the income tax return filing procedure for a proprietorship is similar to that of an individual.

How can we help?

Registrations for Proprietorship firm
All you need is Aadhaar and PAN card to get started. You can choose any name. However, the existing name should not be in the trademark register. Based on your documentation and discussions with you, our experts will advise you on what records you need to obtain.
Shop and Establishment Act License
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.
Udyog Aadhar Registration.
Udyog Aadhaar is a registered company of all micro, small and medium sized companies. It can be used to open a bank account with tax registration along with industry base registration. Through this various subsidies from the government can also be enjoyed.
GST Registration for a firm.
Our team will process GST registration on behalf of your sole proprietor, depending on your business type and your needs. To do this, you need to provide some documents like Aadhar card, PAN card etc.

FAQs

a. Who can start a Sole Proprietorship?

Every Indian citizen can have sole proprietorship.

b. What type of businesses are commonly run as Sole Proprietorship?

From your grocery store to retailers and manufacturers, many local businesses are solely owned.

c. Is the registration online or I have to submit any documents to the government office?

All registrations are completely paperless and online. We also provide all services online so that you don’t need to travel from your office or home.

d. Which documents are needed for opening a current account in the name of my Sole Proprietorship?

Proof of the existence of your company is required to open a checking account. Most banks will apply for MSME registration and / or GST registration. You will also need a PAN card, an address and proof of identity.

e. What if I want to switch from a sole proprietorship to a limited liability company or a limited liability company?

You can always choose to do so. The procedure is very simple. It is common for sole proprietors to convert into partnerships and private limited companies at a later stage.

f. How long does it take to found a company as a sole trader?

A Sole Proprietorship business takes less than 12 days to set up and start functioning. This simplicity makes it popular among small traders and merchants. It is also much cheaper. This is the reason why it’s the most widely used business structure.

g. Still Confused?

Speak to our experts who shall solve all your doubts.
Call us at +91 7738 066 334 or Mail us at info@indiacompanyincorporation.com

What Our Clients Say About Us!

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