Note On Sole Proprietorship - Overview

Note on Sole Proprietorship - Overview

About: 

A business that is owned and managed by a single person. There is no such thing as registration with any statutory Law like Company Law / LLP Law / Partnership Act etc.; 

Proprietorships are recognized by other registrations, such as a service  tax registration or GST or MSME or  Shop and Establishment Act 

Features of Sole Proprietorship

·         Unlimited Liability: Just as a partnership, a sole proprietorship has no separate existence. Therefore, all debts can only be recovered from the sole proprietor.

·         the owner has unlimited liability with regard to all the debts. This should heavily discourage any risk-taking, which means that it’s suited to only small businesses.

·         If you plan on running a business that requires a loan or may end up paying penalties, fines or compensation, it’s best you look into registering an OPC

·         Easy to Start: There is no separate registration procedure for proprietorships. All you need is a government registration relevant to your business.

·         If you’re selling goods online, a proprietor would only need a tax registration (GST). Therefore, starting up as a sole proprietor is relatively easy.

·         Sole proprietors will be taxed on their personal income tax rate.

Disadvantages of Sole Proprietorship

·         Unlimited personal liability.

·         Difficulty in raising investment capital.

·         lack of financial control

·         difficult to find outside investors to fund sole proprietorships

List of documents/information required to register :

1.      Name of the Proprietor Firm

2.      PAN Card

3.      Aadhaar Card

4.      Rental Agreement on Business name if available

5.      Utility Bill - Electricity Bill copy of the address

6.      Email id and phone number

Steps:

Step 1. Open a Current Account in Bank with your Proprietorship Firm name. (For Bank KYC Two proofs required from step 2)

Step 2. Legal Certificate: get register under any 2 of the below:

a)     GST Registration certificate

b)     MSME Certificate

c)      Shop and Establishment Act

d)     IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of bank account.