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.
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.
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.
The Proprietor must be an Indian citizen and a Resident of India.
Proprietorship firms do not have a Certificate of Incorporation.
There is no limit on the minimum capital for starting a Proprietorship. Therefore, a Proprietorship can be started with any amount of minimum capital.
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.
Yes it is much easier to run such business because there are hardly any compliances involved.
