What is Sole Proprietorship registration?
A sole proprietorship is a type of unregistered business unit that is owned, managed and controlled by one person who retains the full authority & responsibility with respect to the business. Sole proprietorships are one of the most common forms of business in India. Sole proprietorship registration is easy and cost effective as well.
The legal responsibility for the obligations of the business lies with the proprietor. Thus, proprietorship is not a distinct entity unto itself, rather business and its owner are clubbed together. In this type of Business, the person operating will only be the director and shareholder himself.
What Type of Business Activity Proffered to Sole Proprietorship Registration?
The form of proprietorship business is preferably suited to businesses like retail, whole-sale, where the nature of the business is simple, financial risk is nominal or least, no need to take enormous debts and the product market is small.
LOW CAPITAL REQUIREMENT
The Business with minimal capital requirements and little or almost no levels of risk are suitable for being run as sole proprietorships. Now, the proprietorship business may require to register itself under tax laws such as GST registration.
What are the Advantages of sole Proprietorship Registration?
as there is no formal registration needed, the cost of setting up such a business is low as compared to other companies or OPC company.
FLEXIBLE BUSINESS DECISION
In sole proprietor business, the person operating such a business the whole and sole who controls it thus the decision-making process becomes quick and efficient and the decision was taken be taken within the time frame.
SOLE CONTROL OVER FINANCE
Finance is a very crucial aspect of every business. So, quick and timely finance decision is undertaken by the person in such business helps to grab various opportunities.
it helps to build good relations with the customer and employees as such models are found in lines of work where close personal relations are maintained.
He is the only person who looks around the entire business so the business secrets are not leaked to outside another proprietor.
LESS TIME CONSUMING
Sole Proprietorship registration is not a time-consuming task. It is very easy to register such business.
It is inexpensive as compared to OPC. No need to hire an auditor. No need for a lot of employment. Other cost savings also there.
MINIMAL STATUTORY COMPLIANCE
The statutory compliance such as annual filings, other professional taxes, sales taxes are not there etc.
EASY TO CLOSE
Being a sole proprietorship firm the winding up of business is an easy task. Not much formality is required only the tax registration obtained in the named proprietor must be cancelled.
Is it necessary to register sol-proprietorship firm?
It is not compulsory to register such a kind of business. But for sake of clarity and giving surety to creditors, it becomes important to register a business. But now, in the case of GST, a proprietor can register itself to establish that he is operating as a sole proprietorship.
Sole Proprietorship Registration Procedure
- Type of registration like GST or Local Labour license required to such business and documents required for the same.
- After receipt of Documents, process the same by filing online with the concerned authority. For e.g: GST application will be made after receipt of documents from the client.
- Lastly, on registration done, update the status of the same to the client.
Difference between one person company and Sole Proprietorship
- Feature OPC Sole proprietorship
- "Sole Proprietorship registration" This need to be registered under Companies Act, 2013 Thereâ€™s no need for separate registration
- Legal identity OPC is a separate legal identity It is not a separate Legal identity
- Liability The sole shareholder have limited Liability Liability extends to his personal assets
- Time Initial set up is time-consuming Initial set up is easy process
- Perpetual Succession OPC has perpetual succession There is no perpetual succession it leads to dissolution of proprietorship
- Tax-ability OPC is taxed separately from the owners Proprietorship is not taxed independently
- Finance obtain Finance is based on credit record of OPC Finance is based on credit record of sole proprietor