Sole Proprietorship: Meaning & Concept
In a Country like India, Sole Proprietorship is one of the most common as well as famous form of starting a business. In the case of Sole Proprietorship, the business is started and owned by a single entrepreneur only who has complete control over the business. Sole Proprietorship is considered as one of the easiest and simplest form of business entity due to its lower cost of formation and compliance. In Sole Proprietorship, the owner himself is the boss, he has full control over all the matters pertaining to business. He is solely responsible for any loss or profit.
Registration as Sole Proprietorship is comparatively less formal in nature as compared to other form of business entities. To start a business as a Sole Proprietorship no legal compliance or formal registration with government is needed. One can commence his business as Sole Proprietorship by just opening a Current bank account in the name of its business itself. However in order to open a bank account for Sole Proprietorship minimum two documents are required as per the KYC norms provided by RBI such as :
To establish a Sole Proprietorship then they must have to provide GST Registration certificate to Banks as a legal business entity.
To get GST Registration click here
Whenever a formal place for business like a shop or Factory or any other establishment is required for Sole Proprietorship Business then it is mandatory for the owner to get a Shop and establishment Act License which is generally provided by the Department of Labor or Municipal authority of a particular state to operate business in that state. In Maharashtra it is known as Gumasta License.
To get MSME Registration click here
Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.
To get Import Export Code click here
- d) Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
No Formal Procedure is prescribed for registration as a Sole Proprietorship as well as no Legal cost is attached to it. Though several documents such as GST Registration, Import Export Code, etc. which are mentioned above costs differently varying from state to state. This is the Cost one needs to pay for registering its firm as Sole Proprietorship.
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