Proprietorship is such kind of form of business which is run by a single person who is known as the proprietor Proprietorship form of business is the most common form of business which is used in India by merchants and small troders. Such business has very less regulatory compliances. However, there is no standard way available to register proprietorship by Indian Government. It is identified through alternate registrations, such as GST registrations etc. However, its labiaty is unlimited and it also doesn't have perpetual existence. Hence, following registrations can be done to show the existence of your proprietorship business:
The owner of a sole proprietorship business signs contracts in his or her own name, because the sole proprietorship business has no separate identity under the law. The sole proprietor owner will have customers write cheques in the owners name even if the business uses a fictional name. Sole proprietor owners can, and often do, mix personal and business property and funds something that partnerships, LLCs and corporations cannot do Sole proprietorships often have their bank accounts in the name of the owner sole proprietors need not observe formalities such as voting and meetings associated with the more complex business forms Sole proprietorships can bring lawsuits (and can be sued) using the name of the sole proprietor owner
Now, let’s discuss the advantages of a Sole Proprietorship:
Sole Proprietorships do not require compulsory registrations under any law. They only require registrations or licenses which are specific as per the nature of business. So, any person can start his/her business easily with a trade name of his/her choice. Any trade name can be used but it must not be similar to the already registered brand name. However, the name does not require any kind of approval from the registry. Further, they do not involve any complexities as they are handled and managed by a single person.
Sole Proprietorship business can be started with a very low amount as it does not require huge investment. Hence, it is a great opportunity for those who want to set up their own business with less amount of fund as there is no criteria of requirement of minimum capital.
Since sole proprietor is the only person who operates and manage the complete business. Hence, whatever profit is earned, completely belongs to the sole proprietor and no other person is entitled to receive such profit.
Since sole proprietorship as such is not governed under any law, hence there are less number of legal compliances. Also, the compliances depend upon the registration or licenses which they have taken for their sole proprietorship business. For example, if the sole proprietorship has taken registration under GST law, then it needs to comply with GST compliances like GST Return filing etc.
As compared to OPC, the Sole Proprietorship business is relatively inexpensive. There’s no need for hiring an auditor or anybody else which saves a lot of costs. Apart from this, it saves the business from other investments as well which are mandatory for other business entities.
Businesses which have more than one member are prone to data theft and information leakage. However, in Proprietorship, there’s only one person who has complete control over the business. Therefore, there’s no chance of any data leakage or theft. The things are completely confidential and are limited to the only person who manages it.
Aadhar Card
PAN Card
Registered Office proof
License/Registration – MSME/GST/Shop and Establishment etc.
Other Documents required for the sole proprietorship entity are as follows:
As discussed before, starting a sole proprietorship business is quite easy and less expensive. There are only two things that you need to do while starting a sole proprietorship business in India. They are as follows:
As such, there is no registration required from the government in order to start a sole proprietorship business in India. You don’t need to fill up a form or submit any documents.
However, the sole proprietorship business can only be established through opening a current account with a designated bank in the name of the firm and should obtain the licenses as per the nature of the business. In case you want to register your sole proprietorship business, you can do it as per the following:
If you own a shop from where goods are sold either by retail or wholesale to the customers or any services are provided to the customer, then you can register your business under the Shop and Establishment Act by making an application to the Local Municipal Corporation of your city/place of business.
You can register your business through Udhyog Aadhar under the Ministry of MSME where you receive a unique identification number and can obtain the benefits and schemes offered by such Ministry.
You can apply for GST registration which is completely optional if the turnover of your business is less than Rs. 20 lakhs. In case you apply for GST registration, then it is mandatory for you to meet all the compliances.
A current account is required to be opened in the name of the Sole Proprietorship business name for carrying out the financial transactions related to your proprietorship business.
The following compliances for the proprietorship firm registration
It’s a simple single person firm. Remember it’s not a company, it’s a best way to start a business in India with the less costing and less compliance. its need only just one person for the legal registration.
When single person runs a business then such kind of business is called as proprietary business, and the owner of the business is called as proprietor.
Any Indian citizen who is a resident of India can become a proprietor.
A proprietorship firm can be started with any amount of capital.
Yes. It is Possible to do so.
By providing relevant documents such as sole proprietorship proof, proprietor ID proof, proprietor Address proof, one can open current account in bank for a proprietorship.
No. NRI cannot become a proprietor.
Sole proprietorship companies are not considered as a separate legal entity from their owners and thus there is no separate act for them.
Most local businesses are run as sole proprietorships, from grocery stores to fast-food vendors, and even small traders and manufacturers.
Proprietorship firms do not have a Certificate of Incorporation.
No, the existence of a sole proprietorship business is dependent on the life of the proprietor.
No, a minor cannot allow starting a sole proprietorship. Only a major whose age is above 18 can start a sole proprietorship firm.
Yes, a sole proprietor is allowed to hire and have employees.