Sole Proprietorship

What is a Sole Proprietorship?

When a business is owned and governed by one person, it is called a sole proprietorship company. This type of business can be incorporated in fifteen days and hence makes it one of the most popular types of business to begin in the unsystematic sector, specifically among merchants and small traders. For a Sole Proprietorship business, registration is not required as it is identified through alternate registrations, such as GST registrations. However, its liability is unlimited and it also doesn’t have perpetual existence.

Checklist Items for a Sole Proprietorship Registration

• A certificate/license issued by Municipal authorities under the Shop & Establishment Act.
• The license issued by Registering authorities like the Certificate of Practice is issued by the Institute of Chartered Accountants of India.
• The registration/licensing document is issued in the name of the proprietary concern by the Central Government or the State Government Authority/ Department, etc.
• The banks may also accept the IEC code (Importer Exporter Code) issued to the proprietary concern by the office of the DGFT as an identity document for opening the bank account etc.
• Complete the Income Tax return online (not just the acknowledgment) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated, and acknowledged by the Income Tax Authorities,
• The utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern,
• Issue of GST Registration/Certificate.

Compliances Required For Sole Proprietorship Firm

Some of the compliances that apply to a sole proprietorship include the following:

• Income Tax Return Filing: The proprietorship’s business owner must submit a personal income tax return using form ITR-3 or ITR-4
• Business Income: Only the ITR-3 and ITR-4 income tax forms allow for the declaration of business income. As a result, in order to comply with income tax requirements, all proprietorships must submit forms ITR-3 or ITR-4
• GST Return Filing: If a proprietorship is registered for GST, a filing GST return each month and every three months in accordance with the business’s registration plan
• TDS Returns: Tax must be withheld at source and TDS returns must be filed quarterly if the proprietorship has employees or spends more than a specific amount on goods and services.

In addition to the mentioned points, the proprietorship may also need to comply with additional regulations according to its industry and region.

How We Execute a Sole Proprietorship Registration Procedure?

Professional Guidance

Our experts give you professional guidance on many of the processes involved in registering your business as a sole proprietorship, along with registration of service tax, sales tax, import/export code, and professional tax.

Vendor Relationship

Our team will connect you with an established vendor who will book your application and also keep you updated on its status and progress. The vendors we have onboard are well-accomplished and skillful in managing native registrations.

15 Business Days

Our team will offer full assistance with the registration process. This could vary between 5 and 15 days, depending on the task at hand for the authorities involved.

Documents Required For Registering A Sole Proprietorship

To start a Sole Proprietorship, the following documents are required

• Address and identity proof
• PAN card, KYC documents and
• Rental agreement or sale deed (in case of Shops & Establishment Act Registration).

What Are The Documents Required For Opening A Current Account?

To open a current account, the following documents are required;

• Proof of the existence of your business
• Shops & Establishments Act Registration
• PAN card
• Address and Identity proof

Benefits of Sole Proprietorship Firm

Sole proprietorship is a popular form of business in which an individual owns and operates a business. Some of the benefits of a sole proprietorship firm are:

Sole proprietorship firms are easy to set up and operate. There are no formalities to be followed for setting up a sole proprietorship firm, which makes it a popular choice among small business owners.

Full Control

The owner of a sole proprietorship firm has full control over the business. They are free to make decisions without any interference from others.

No Separate Legal Entity

A sole proprietorship firm does not have a separate legal entity from its owner. This means that the owner is personally liable for all the debts and obligations of the business.

Tax Benefits

Sole proprietorship firms are taxed as individual taxpayers, which means that the owner can claim deductions for business expenses and losses on their personal income tax return.

Minimal Compliance Requirements

Sole proprietorship firms have minimal compliance requirements compared to other forms of business. They are not required to maintain any formal records or hold annual meetings.

Flexibility

Sole proprietorship firms offer great flexibility to the owner in terms of operations, management, and decision-making.

Low Cost

Sole proprietorship firms are cost-effective to operate as they do not have to pay for legal fees or comply with complex regulatory requirements.

Overall, a sole proprietorship firm is an ideal option for small businesses with minimal capital and limited liability.

Proprietorship Vs Limited Liability Partnership (LLP) Vs Company