Sole Proprietorship

What is Sole Proprietorship?

The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name. It does not create a legal entity separate from the sole proprietor owner. The owner of a sole proprietorship typically signs contracts in his or her own name, because the sole proprietorship has no separate identity under the law. All the income earned by the sole proprietorship is the income of the owner and he is personally liable for all debts of a sole proprietorship business. Sole Proprietor firms are governed based on the Shop and Establishment Act of the states from which they operate.

Advantages of Sole Proprietorship

• Control of Business:-Since sole proprietor is the only owner of the business so he has the full control of business. All the decisions are solely made by him and do not need to seek the approval or consent of any partners, members, officers, directors, or shareholders as requited in any partnership firm or company.
• Simplified and Less Costly Organization: -There are no forms to complete, and no government fees to pay, to form a business as a sole proprietorship.
• Privacy:-Since a sole proprietorship does not file any formation documents or annual reports with the federal or state governments, so business operations are not subject to public disclosure like a partnership firm or a company.
• Minimal-to-No Reporting Requirements :-A sole proprietorship does not need to file an annual report with the state or federal governments and will not be required by law to conduct certain meetings of partners or members or shareholders, or file certain reports with the state government.
• Simplified Tax Reporting:-Sole proprietorship does not need to file any special tax forms with the state or federal government. Generally, the only tax form a sole proprietor will file is a Schedule C (Profit or Loss from a Business) as part of their annual Form.

Procedure for the Registration of Sole Proprietorship

1. Registration as Shop & Establishment- If you have a shop where goods are sold as retail or wholesale or services are provided to customers (but does not Include a factory/ a commercial establishment/ residential hotel/ restaurant/ eating house/ theater or other place of public amusement or entertainment) than you can register as a sole proprietorship firm business under the Shop and Establishment Act by making an application to the local Municipal Corporation of the city.

2. Registration through Udyog Aadhar under Ministry of MSME-An Udyog Aadhar is a unique identification number provided by Ministry of MSME to the business owners. By applying for Udyog Aadhar, business can register itself to avail benefits of various schemes introduced by Ministry of MSME.

3. Registration through GST Registration-You can apply for GST Registration if you are dealing in any kind of exchange of goods and services. It is a great method for getting an identity for sole proprietorship concern.

Documents required for Registration of Sole Proprietorship

1. Passport size photograph of the Proprietor.

2. Firm Name with Registered Office.

3. Proprietor Pan Card & Aadhar Card .

4. Email-id & Contact Number.

5. Name of Products / Services in which Your Firm is dealing.

6. Saving Bank account statement/ First Page of Passbook/ cancelled cheque of proprietor.

7. If Business Property is own provide Electricity Bill or Legal Ownership Documents other-wise Provide Rent Agreement.