Ways to setup Sole Proprietorship in India
- swaritadvisors
- May 16, 2018
- 2 min read
Sole Proprietorship Registration is a simple form of business entity with minimum regulatory compliances. It is owned by the single owner whose liability will be unlimited. Under this, owner is called as Sole Proprietor. To start with sole proprietorship, one has to acquire license according to the business type such as registration under GST, Shops and Establishment Act, MSME registration and food license in case of food business. However there are threshold limits which exempts from compulsory registration.
Features of Sole Proprietorship Registration
· Full control over the business
· Unlimited Liability
· Decision making power
· No Perpetual Succession
· It is not a separate legal entity
· Lesser regulatory compliances
Advantages of Sole Proprietorship Registration
· Easy formation
· Taxation Benefits
· Decision making power
· Less legal compliances
· Lower formation cost
Disadvantages of Sole Proprietorship Registration
· Limited Ideas
· Unlimited Liability
· Lack of Credibility
· Inability to raise funds
· Further addition of partners cannot be done
Documents required for setting up Sole Proprietorship Registration
There is no prescribed process of Sole Proprietorship Registration. It can be done as per the type of the business activity.
In case of registration under Shops & Establishment Act
· Copy of PAN of Proprietor
· Copy of Identity Proof (Aadhar/ Passport/ Voter ID)
· Bank Statement
· Copy of Address Proof
· Passport Size Photograph
In case of Tax Registration(GST Registration)
One has to obtain GST registration, in case turnover exceeds Rs.20 lakhs and Rs.10 lakhs in case of north east region. However in some cases GST registration is required to be obtained.
Following below mentioned documents are required for GST registration:
· Copy of PAN
· Copy of Aadhar Card
· Proof of business location
· Copy of bank statement
· Passport size photograph
In case of Bank Account Opening
Bank account can be opened on the name of the Company, if proprietor has obtained any of the license. As banks ask for legal certification from the proprietor.
Following below mentioned documents are required for bank account opening as per RBI for KYC such as:
1. License issued under Shops & Establishment Act;
2. GST registration certificate
3. Certificate of Practice issued by authorities such as following:
· Institute of Chartered Accountants of India,
· Institute of Cost Accountants of India,
· Institute of Company Secretaries of India,
· Indian Medical Council, Food and Drug Control Authorities.
4. License issued by Central or State Government to the proprietors.
5. IEC (Import Export Code) issued to the proprietor by the DGFT.
6. Income Tax Return (ITR)
7. Utility bills on the name of the proprietor.
Usually sole proprietor finds it difficult to manage all the business activities solely and they decide to convert it into another form of business entity.
Sole proprietorship is best for small entrepreneurs as it involves low formation cost. Our team of experts will help you in Sole Proprietorship Registration process. They will verify the documents and start the necessary process.
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