In India, all the petty retailers, traders, small scale entrepreneurs, etc. register themselves as Sole Proprietor of their firm as they solely want to own their firm without distributing profits...
Sole proprietorship is the easiest and the least expensive way to start a business. Most small businesses are generally sole proprietorships. But what is a sole proprietorship? Should you start such business? In this article we will discuss about what is sole proprietorship business and should they be registered.
Sole Proprietorship in India
A sole proprietorship or simply we can call it proprietorship is such form of a business in which a person or an individual starts a business under his or her own name. Sounds simple, Right? It’s because it is. An individual proprietor completely owns and manages the business and is responsible for all the transactions.
Basic features of Sole Proprietorship
- The owner is completely responsible for all the debts and liabilities. This type of business is completely owned and run by one single person.
- In such business, there is no legal difference between the owner and the business entity.
- The owner is in direct control of all the elements and is legally accountable for the finances of such business which may include debts, loans, loss, etc.
- A sole trader does not necessarily work all alone; it is possible for such person to employ other people also.
- The sole proprietorship is the simplest business form through which a person can start its business.
- The sole proprietorship is not a legal entity.
- It simply refers to a person who owns a business and is personally responsible for all its working.
How can I Start Such Business?
As discussed above, 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:
- First of all, you need to select the name for your business which is quite mandatory.
- Secondly, select a location where you would want to start your business.
Do I need to Register Sole Proprietorship in India?
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:
- Registration under Shop and Establishment Act: 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.
- Registration under MSME: 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. To know more please visit Swarit Advisors
- GST registration: 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. To know about the process of registration under GST please visit Swarit Advisors.
Well, to understand more about a business set up or for business advisory do contact Swarit Advisors.