In business, where its entity and the owner are same, it is referred to as sole proprietorship. There are various other names for a sole proprietor, such as a sole trader, individual entrepreneur, etc.
Any individual who wants to start a business or company with less or more investment can register for a sole proprietorship. The control, decision-making, and execution will be in the hands of the sole proprietor.
Moreover, the business owners are entitled to apply for business loans which can help with the investment capital for business. Now that we have discussed sole proprietorship meaning, let us further discuss it in detail.
Sole Proprietorship: Key Points
- The owner has full control of the business and bears all the profit and losses alone
- The business finances and the owner’s finances are one and the same thing
- Sole Proprietorship requires minimal documentation hassle-free registration process
- Sole proprietorship is different from One Person Company
- These are easy to establish, which makes the quite popular among small business owners and entrepreneurs
- In Sole Proprietorship, the business is also taxed as an extension of the owner
Features of Sole Proprietorship
Below are the key features of sole proprietorship:
- Complete Ownership: There is no separate existence of a sole proprietor hence all the debts can only be recovered from him
- Easy Process: There is no elaborate or lengthy registration process for establishing proprietorship firms
- Flexibility: The operational strategies are flexible, which makes it easier to understand and operate them
- Undivided Profits: The owner is the only person to accumulate the profits and further invest it in the market and other ventures
Documents Required for Sole Proprietorship
For sole proprietorship registration, the following documents are required to be submitted:
- Aadhar Card
- PAN Card
- Bank Account Number
- Registered Office Address
How to Start Sole Proprietorship in India?
To start a sole proprietorship in India, applicants must first register the business as a sole proprietorship under the Registrar of Firms under the Government of India. This is only possible when the applicant has a current account. Not only this, but the application form is also required to be submitted deposit along with a minimal registration fee with the respective authority or Registrar of Firms.
Frequently Asked Questions
Does an owner require a separate bank account to register a sole proprietorship firm?
No, the owner can also register for a proprietorship firm from the personal bank account.
Are there chances of others investing in a sole proprietorship?
Yes, other people can make investments in a proprietorship firm. However, they cannot become a partner or member of the firm.
Is it mandatory to have ownership of the office for business operations?
No, even a rented office can be used for the registration of sole proprietorships. However, the landlord’s rental agreement and a NOC must be submitted as proof.
Is GST registration mandatory for sole proprietorship firm registration?
GST registration is mandatory for a sole proprietorship if the annual turnover is more than Rs. 40 lakh; otherwise is an add-on for your registration application.
How much time does it take to start a proprietorship firm?
It takes 15 days approx. for starting a sole proprietorship firm.