Sole proprietorship Registration

What is a Sole Proprietorship?

When a business is held and governed by one individual it is referred to as a sole proprietorship company. In this form of business a single individual handles the entire business operation. He is the only individual to enjoy profit and bear loss. There is no specific law that directs sole proprietorship. Proprietors of such corporations have unlimited business liability. This involves that owners personal assets could be attached to meet business liability claims. It is not possible towards transferring the ownership of a Sole Proprietorship from one individual to another.

Sole Proprietorship Registration

For a sole proprietorship business, registrations are not essential as they are recognized by alternate registrations such as GST registrations. Though its liability is unlimited and it also does not have a continuous presence.

Sole proprietorship registration is needed for the individual owned business for doing business, hence it is recommended to get the given registrations in order to run the business function smoothly and legally. An individual could select any of registration from the below:

• Shop and Establishment Registration under the laws of the individual states.

• Registering as SME.

• GST Registration.

The documents required for a Sole Proprietorship registration are:

• Aadhar Card.

• Registered office proof.

• PAN Card of the proprietor.

• Electricity/ Water bill (Business Place).

Advantages of the Sole Proprietorship Registration

An individual doesn’t need to register their sole proprietorship business in India. But with the intention of receiving payments in the name of the business, an individual is required to open a current account in a bank. For this, an individual would need proof of the existence of the company, and the address proof.

Business Name

As the name of a Proprietorship is not registered, a Proprietorship could choose to have any name, as long as it doesn’t breach on a registered trademark. Though, since the name is not registered, any other individual could also use the same business name unless trademark registration is acquired.

Taxation

A Proprietorship with below Rs. 2 lakhs of income is not needed to pay any income tax since Proprietorships are taxed as the individual owing the business. Though, once, the income of the business surpasses Rs. 10 lakhs per annum, there are no major benefits for a Proprietorship regarding taxation.

Sole Proprietorship Registration Process

1.    Applying for PAN. If an individual already has one this step is not needed.

2.    The next step is naming the business.

3.    There is no formal registration needed, but the next step is to open a bank account in the name of the commerce.

4.    An individual could also register as a Small and Medium Enterprise (SME) under MSME Act, though not compulsory, it is beneficial towards being registered under the same.

5.    An individual could also register for GST if the turnover goes beyond Rs 20 lakh. One could also get a Shop and Establishment registration done.

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Author:

eStartIndia Team