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Sole Proprietorship

It is the oldest and the simplest form of business entity. This type of business entity is mainly suitable for small-scale business operators. Sole Proprietorship Company is owned and managed by the individual making him the sole authority to take all kind of decisions regarding the operations of the organization. Further, the taxation and accounting procedure in this form of company is much easier than other forms of companies. As a sole proprietor is not required to file a separate business tax return and all income generated from the business is reported on the personal tax form.

Advantages

Documents/Details Required for Registration of Sole proprietorship business

Following documents of the Proprietor is required: 

  1. Copy of Aadhaar Card
  2. Copy of Voter ID Card
  3. Copy of PAN Card (compulsory),
  4. Any utility bill like water bill, electricity bill, property tax receipts or Gas Bill etc. of the business place.

Documents/Details Required for GST Registration of Sole proprietorship business

  1. Proof of identity. Such documents include Aadhaar, PAN, Passport, Driving license or any other Government-issued identity document would be required.
  2. Bank account details. 
  3. In the case of leased property, the copy of lease deed for the registered office premises along with a NOC from Landlord and electricity bill/property tax receipt/water bill copy of the registered office property.
  4. In case of own property, copy of sale deed along with the electricity bill/property tax receipt/water bill copy of the registered office property.

Naming Criteria of a Sole proprietorship business

Since this kid of business structure is not much regulated by law, there are hardly any naming criteria’s. Just the name should not be illegal or offensive and it should not be misleading for the public.

Eligibility for registering a Sole proprietorship

Since this kind of business exists only in India, only a natural person who is a resident of India can be a promoter and the business should have a legal objective.

Minimum and maximum requirements of Sole proprietorship business

Only 1 individual holds the entire authority.

FAQs

The Proprietor must be an Indian citizen and a Resident of India.
Proprietorship firms do not have a Certificate of Incorporation.
3. How much money do I have to invest to start the business?
There is no limit on the minimum capital for starting a Proprietorship. Therefore, a Proprietorship can be started with any amount of minimum capital.
4. How to open a bank account for a Proprietorship business?
To open a bank account for a Proprietorship, Reserve Bank of India mandates that the proprietor must provide two forms of registration for the Proprietorship firm along with the PAN Card, identity proof and address proof of the Proprietor. The two forms of registration can be any two of the following: service tax registration, MSME registration, GST registration, Shop & Establishment Act registration, Professional license, Chartered Accountant certificate or others as provided in the RBI Know Your Customer norms.
5. Is it cheaper to run than any other form of business?
Yes it is much easier to run such business because there are hardly any compliances involved.

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