REGISTRATION OF A SOLE PROPRIETORSHIP FIRM

REGISTRATION OF A SOLE PROPRIETORSHIP FIRM

276
0
Print Friendly, PDF & Email
SOLE PROPRIETORSHIP FIRM
SOLE PROPRIETORSHIP FIRM

SOLE PROPRIETORSHIP FIRM

A sole proprietorship in simple terms is also known as a SOLE TRADER or PROPRIETORSHIP. It is the simplest form of business owned by a single owner who owns all the assets of the business. He is liable to pay all the debts and pay personal income tax on profits. The income earned by a sole proprietorship is income earned by its owner. There is no legal distinction between the owner and the business, that is, legally it has no separate existence from its owner. A sole proprietorship has both advantages and disadvantages.

The advantages of a sole proprietorship are as follows:

1) The procedure to establish a sole proprietorship is not complicated and is inexpensive.

2) A Sole proprietorship needs petty formalities.

3) A sole proprietor is not required to pay any unemployment tax

4) The owner has total control over his business and full decision making power.

5) Opening and closing down of the business is easy.

The disadvantages of a sole proprietorship include:

1) The sole traders are subjected to unlimited personal liability for all the debts, losses and liabilities occurring out of the business.

2) The most difficult task for the owners is to obtain capital funding

3) Sole proprietorships rarely or do not survive the death or incapacity of their owners

4) Risks taken may lead to personal bankruptcy, in this case the person would have to take the time to select a Leading Bankruptcy attorney that’s capable having success with the case.

 

REGISTRATION OF A SOLE PROPRIETORSHIP FIRM

Registration of a sole proprietorship is a simple procedure having minimal costing and fee. It needs minimum of one person for its registration.

The main objective is to open a current bank account in the name of the business but while opening of the current bank account, a legal proof is required to show the business as a legal entity, so in the case of firm it is called TAX REGISTRATION or SHOP AND ESTABLISHMENT LICENSE or any other local license.

There are two categories of business, depending on which tax registration is done

1) SERVICE BASED BUSINESS: The service-based Business category includes business like eCommerce Marketplace, Service Based Online Consultancy, Cab Service, Classifieds Website, Website Development Service, App Development Service and many other services based business.

Given below is the list of documents required for the registration of a SERVICE BASED PROPRIETORSHIP:

  1. PAN Card of the sole Proprietor.
  2. ID Proof and Address Proof of the sole Proprietor as Aadhaar Card, Driving License or passport etc.
  3. If the property in on rent, then a Rent Agreement or a No Objection Certification is required.
  4. If the Proprietor has owned any property, then sales deed copy or electricity bills are required.
  5. Bank Statement copy or cancelled cheque copy.
  6. Other documents like undertaking & other which is prepared by the legal advisor.

 

 2) PRODUCT/ MANUFACTURING BASED BUSINESS: These type of Business sell products to their customers through their own website or offline. They are selling VAT applicable products to consumers, therefore these type of startups falls in this category. Example: Ecommerce Website/Importer/Exporter/Selling Ecommerce Marketplace i.e Flipkart/Snapdeal or offline trading business.

Given below is the list of documents required for the registration of a SERVICE BASED PROPRIETORSHIP:

  1. PAN Card of the sole Proprietor.
  2. ID Proof and Address Proof of the sole Proprietor as Adhar Card, Driving License or passport etc.
  3. If the property is on rent, then Rent Agreement or a No Objection Certificate is required.
  4. If the proprietor owns any property, then sales deed copy or electricity bills are required.
  5. Bank Statement copy or cancelled cheque copy.
  6. Security Amount or Guarantors required in some state for the VAT/CST Registration. In some state like Delhi, there is no security right now.

PROCEDURE FOR REGISTRATION OF THE SOLE PROPRIETORSHIP

  1. Prepare the documents mentioned above as required for sole Proprietorship Registration.
  2. Apply for the Service Tax or VAT
  3. Get Service tax or VAT Registration Certificate.
  4. Apply for a current bank account in any bank with your complete documentation.

In India, however there is noformal procedure for the registration of a sole proprietorship.Many businesses running in India are unregistered and are mostly operated by sole traders. The above mentioned documents and procedure is merely to satisfy the RBI’s norms and acts as a proof of existence of a sole proprietorship.

Some of the related articles:

  1. Registration of Sole proprietorship
  2. SOLE PROPRIETORSHIP SOLE PROPRIETORSHIP
  3. How To Start Business?
  4. Cost of Sole Proprietorship Firm Registration

To register a Sole Proprietrship Firm click here

OUR SERVICES

Company Registration I Trademark I Copyright I Patent I GST I MSME

 ISO Certification I Website/App Policy I Legal Documentation

Annual Compliance I Connect Consultant

Visit: Aapka Consultant to get Online Services of CA CS & Lawyers.

NO COMMENTS

LEAVE A REPLY