The simplest way to start your own business is to form a Sole Proprietorship Entity for conducting any business in India. This form of business ownership gives you the privilege of “Being Your Own Boss” to own,lead, manage and control your business operations.Sole Proprietorship Registration is quite simple and swift with minimum legal formalities and documentation. If you want to be your own boss and want to register Sole Proprietorship firm in India then read the following blog:-
Features of Sole Proprietorship Entity
- Single Ownership- Owned, operated, controlled by an individual also contribution and ownership of capital lies with the proprietor.
- Risk and Reward Individual- All risk and rewards will be borne and enjoyed by the proprietor only.
- No Separate Entity- In Sole Proprietorship there is no legal distinction between the entity and the owner.
- Commencement of Business- The sole proprietor can easily commence and operate its business with no government interference and with least resources and minimum documentation.
- Restricted Control- All the decision making and business management is under the control of single person.
- Going Concern Challenge- As the entire business is under the leadership of one person therefore in case of death, insolvency, in-capacity of the proprietor directly affects the business.
Advantages of Sole Proprietorship
- Easy to form and dissolve- Sole Proprietorship business can be started easily with minimal legal documentation.
- Direct relationship between efforts and rewards as both decision making and execution are in the same hands.
- Single Control- Since you are the only owner of a sole proprietorship, you are in complete control of your business. You do not need to seek the approval of any partners, members, directors, or shareholders, as you would need to do if you had a partnership, LLP, or company.
- Privacy- Since a sole proprietor entity does not requires annual filing of statements of affairs to the government authorities therefore your buisnes operations are not subject to public disclosure like company or other form os business entities.
- Sole Beneficiary of Profit- The right over the entire profit earned is of the Sole Proprietor only.
- No Separate Income Tax Return-The Proprietor have to file returns and pay taxes only in his/her personal name. There are no separate income tax returns to be filed and no tax to be paid by the firm
- Suitable for Micro Small and Medium Enterprises– Sole Proprietorship is best suitable for starting a small scale business where the capital and other resources requirements are quite less.
Disadvantages of Sole Proprietorship
- Unlimited Liability- Any and every loss is to be borne by the proprietor only. In case the entity is unable to pay off its debts then the personal assets of the proprietor are attached to recover the due payments of the entity.
- Limited Resources- The capital/funds required for set up and operation of business to be arranged by the Proprietor himself which may not be sufficient for long term business requirements.
- Lack of Managerial Skills- The Sole owner is the only decision making authority and therefore there are no other management experts from specific fields who can advice on various technical and other managerial challenges.
- Fund Raising- At instance a single person can contribute from his savings and start a business but its difficult to raise the fund to scale the business since the proprietor cannot issue shares to public or other investment income etc.
Ways to register your firm in India
First is Sole Proprietorship firm registration under Micro Small and Medium Enterprise (MSME) with GST Registration and Second is MSME without GST Registration. The time period and documents required under both type of registration is mentioned hereunder-
|No.||Type of Registration||Time Period||Required Documents|
|1.||MSME Registration||1-2 Working Days||MSME Form + PAN Card + Aadhar Card|
|2||MSME+GST Registration||8-10 Working Days||GST Form + PAN Card + Aadhar Card + Cancelled Cheque, Passport Size Photo of Proprietor + Address Proof of Business(Latest Electricity Bill) & Rent Agreement (if rented)|
Visit: Aapka Consultant to get Online Services of CA CS & Lawyers