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A sole proprietorship is the most common form of business used by micro & small businesses in the unorganized sector. A proprietorship business is easy to start & has minimal operating regulatory compliance. As its name suggests proprietorship business is owned, controlled & managed by one person.
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Overview of Sole Proprietorship
A sole proprietorship is the most common form of business used by micro & small businesses in the unorganized sector. A proprietorship business is easy to start & has minimal operating regulatory compliance. As its name suggests proprietorship business is owned, controlled & managed by one person. It is most suitable for unorganized & small businesses because it does not provide benefits such as limited liability, corporate status, separate legal entity, etc. The proprietor is personally liable for all the liabilities of proprietorship. The government does not provide any framework for the registration of a proprietorship. Hence, it exists through various tax registrations & business registrations in the name of proprietor like GST registration, etc. to establish that the proprietor is operating a business as a sole proprietorship.
Legal Suvidha Provider offers various company registrations like private company registration, OPC, Section 8 Company, etc. Generally, it takes 3-5 working days to complete proprietorship registration subject to processing time & submission of documents.
Advantages of Sole Proprietorship
|EASY TO ESTABLISH & CHEAP||Proprietorship requires minimal registration compliance & therefore cheaper to incorporate.|
|SOLE DECISION MAKER||Since, there is only one person who controls & manages the affairs of proprietorship; it is easier to operate a proprietorship. So, there is no requirement of a board meeting or approval, etc.|
|NAME OF BUSINESS||A proprietorship can choose any name as there is no requirement of registering its name as long as it is not infringing any trademark.|
|SINGLE OWNER & PROFITS||Proprietorship can be registered & operated by one person. So, it is a natural corollary that he is the sole owner of all the profits earned by the proprietorship.|
|TAX BENEFITS||Proprietorship is treated the same as an individual for income tax law. So, the exemption limit of Rs. 2.5L is also applicable to proprietorship & the proprietor would only have to file income tax returns if the exemption limit is crossed. Also, other slab rates as applicable to individuals are also applicable to proprietorship as well.|
|EXIT PLAN||Since, there is no separate identity of Proprietorship there is no formality of winding up or closing proprietorship. It can be closed down by just canceling the registrations obtained in the name of the proprietor.|
Step 1: IDENTIFYING A WAY OF ESTABLISHING SOLE PROPRIETORSHIP Legal Suvidha Expert will advise you on the best way of establishing the identity of proprietorship & opening a bank account in name of the business on case to case basis as there is no specific way of incorporation.
Step 2: REGISTRATION After selecting a suitable name, the identity of Proprietorship can be established by taking GST registration or SSI/MSME registration.
1. Aadhar card of proprietor
2. PAN Card of proprietor
3. Bank account
4. Registered office proof – if Rented Property then, Rent Agreement & NOC from Landlord but if self – owned property then electricity bill or water bill.
FAQ's Sole Proprietorship :-
The proprietor should be an Indian citizen & Resident of India.
No, there is no incorporation certificate of proprietorship firm.
No, there is no minimum capital for starting a proprietorship.
There can be any name of the firm provided it does not infringe any registered trademark.
No, only an Indian resident can be a proprietor but NRIs can invest in a sole proprietorship.
If applied for GST then GST returns. Income tax returns to be filed showing income earned.
What Our Clients Say About Us
In this Journey, we had gained the trust of many startups and businesses in India and stands with 4.9-star rating in google reviews.
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