What is Sole Proprietorship Registration?
- A sole Proprietorship or Proprietorship is a type of enterprise which has no legal distinction between the owner and the business entity.
- It is owned and run by one person. A sole trader does not necessarily work ‘alone’—it is possible for the sole trader to employ other people as employee.
- A sole Proprietorship usually does not have to do incorporation or registration compliance.
- The sole Proprietor is entitled to have all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts.
- Proprietor is the owner of all assets and responsible for all debts of the business.
- Trade can differ from the legal name of the sole proprietor and Proprietor may trade mark his trade name.
What are the features of Sole Proprietorship?
A sole trading firm is owned by one individual with unlimited liability in which the proprietor is responsible for management and capital requirements of the business.
Personal Organization or Common Identity
A Sole Proprietorship concern has no separate legal entity independent of the owner. The owner owns the business and he owes everything the business owes.
The capital is invested by the owner from his personal resources. Other option is to borrow money from his friends and relatives if he cannot depend solely on his personal resources.
The liability of the Proprietor is unlimited. Dues of Business can be recovered from the personal property of the Proprietor as the business assets are not sufficient to pay their debts.
One Man Control
Sole Proprietor is one-man show. The sole trader provides management to the business. All the decisions, material procurement resources, employment of persons are controlled by the Sole proprietor. He can delegate his duty to his/her subordinate if he wants.
Profits and Losses
The Profits earned from the business of the sole proprietorship belongs to proprietor and losses and risk are to be borne by him alone.
No Special Legislation
Sole Proprietorship is not governed by any special legislation.
What are the advantages of Sole Proprietorship?
- All profits belong to Sole Proprietor
- Low start-up costs
- Maximum secrecy
- Establishing and operating business is simple
- Easy to change your legal structure if circumstances change
- Easy winding up of business.
What are the disadvantages of Sole Proprietorship?
- Unlimited liability for debts
- Capacity to raise capital is limited
- All the responsibility for making day-to-day business decisions is on Sole proprietor
- Retaining and attraction of high-calibre employees can be difficult
- Taxed as a single person
- Business has limited life.
What is the Registration Process of sole proprietorship?
Select unique name of your proprietorship business. Name should not trespass with others registered Trade Mark.
TAN is required to be applied, according to the income tax rules, a person is liable to deduct TDS (tax deducted at source) on payments of specified nature made to any other person.
To avail certain benefits of Govt schemes and benefits under MSME scheme, MSME registration is required. Register your own company at Onfiling.
What is the common Registration or Licenses For Sole Proprietorship?
Shops & Establishment Registration
It is mandatory for shops and the commercial establishments to obtain establishment registration with the Labour Department within 30 days of starting their business.
It is mandatory for all states in India.
To make sure about the citizens are not adversely suffering from hazard and nuisance by the improper carrying of trade practices a License is necessary from the municipality within 30 days of starting the business.
Goods and Services Tax (GST)
GST Registration is mandatory for each business engaged in providing services or supply of products, where the turnover exceeds Rs. 20 Lac or does even one transaction in an interstate trade.
Food License / FSSAI Registration
If you are involved in the business of producing, trading, storing, or dealing in any manner of food items. The State level FSSAI registration or Central License is mandatory based on the turnover.
Retail Drug License is location-based and is issued by the State Government on the basis of certain norms and criteria. No entity can start or continue sale/trade of medicine without drug license.
Private Security Agency License
Private Security Agency may be a lucrative business with immense potential and it can be started or continued only after obtaining a license from the competent authority as designated by the state government.
Import Export Code (IEC)
IEC is a ten-digit pan based registration with the DGFT. IEC is a mandatory prerequisite to start a business of Import or Export in India. Only one IEC code can be issued against a pan.
What is the difference between sole proprietorship and one person company?
|BASIS||LLP||Pvt. Ltd. Co.||One Person Company||Partnership Firm||Sole Proprietorship|
|Suitable for||Firms such as accountancy, legal and architecture||Business with projected growth which requires additional funding for expansion||Sole owner who wants to run corporate business||Traditional business||Individual person with minimum risk factor|
|Liability||Limited||Limited||Limited||Unlimited liability||Unlimited liability|
|Continuity of business||Yes||Yes||Yes||No||No|
|Tax benefits||Most efficient||High benefits||High Benefits||Minimal||Minimal|
|Cost of Registration||Lower rate of government fees||Cost is higher than LLP||Comparatively less||Comparatively less||Comparatively less|
|Ownership Status||Corporate Entity||Corporate Entity||Single Person Corporate Entity||Partner Based||Individual Base|
|Compliance||Less compliances||Requires more compliance||Minimal||Minimal||Minimal|
|Foreign Ownership||Allowed with approval of RBI & FIPB||Allowed under Automatic Approval route||Not allowed||No FDI is allowed||Not allowed|
|Number of Directors||2- unlimited||2-15||1-15||Not applicable||Not applicable|
|Number of Members||2- unlimited||2-200||1||2-20||1|
|Transfer for Ownership||Transferable with consent of all partners||Easily Transferable||Easily transferable||Not possible||Not applicable|