A sole proprietorship is a business owned and administrated by a single person. No statutory or formal procedure is required for registering for Sole proprietorship, you can go for other registrations as defined by the government e.g. GST and MSMERegistration or Shop and Establishment Act License, based on the type and suitability of the business.
Sole proprietorship is a single ownership company, and business owners can signs contracts in his or her name. Sole proprietorship business has no separate identity as per the law.
It is not necessary to write checks in the business name. Sole proprietor owner can issue checks and do transactions with his name. Owner of Sole proprietorship can owners can use personal and business property and funds together, which is not possible in other business types like partnerships, LLCs and corporations. Sole proprietorships can also have their bank accounts in the name of the owner. Other business formalities like meetings and members voting are also not required as accompanying with the other complex business arrangements. Sole proprietorships can be sued using the name of the sole proprietor owner.
A sole proprietor firm has the following key features;
The first step is to apply for getting the Permanent Account Number or PAN from the government to run the business.
The next step is to opt for a unique name for the business entity which clearly defines the purpose of your business. Also, the selected name should not in use by any other business.
Sole proprietorship owners can also apply for Micro, Small and Medium Enterprises Registration under the MSME Development Act, 2006.
After setting up Sole proprietorship also get GST Registration if the business turnover surpasses the limit defined for the same in respective state.
Sole proprietorship formation is simple and easy and less difficult as compared to other systems of business. It can be easily formed by a single person with less paperwork and regulations.
Sole proprietorship business can easily be closed anytime by the proprietor. Business property can also be sold by the proprietor without any technical hitches.
A single owner can manage the entire business on his will and wish. No need to seek the permission of any other person.
At any point in time, the proprietor can change the legal structure of the business easily. This process also does not require much time and effort.
Any citizen of India having a current account in the name of his business can start a sole proprietorship. Registration is not be required, depending on the type of business. However, Registration is required to open a current account, in the banks.
No, Certificate of Incorporation is not required for Proprietorship firms.
There is no minimum requirement on the capital to start a Proprietorship. A Proprietorship business can be started with any minimum amount.
The procedure to convert Proprietorship into a Private Limited Company or Partnership is a little difficult, but not impossible. As business expand a sole proprietors can be converted into partnerships or private limited companies at a later stage.
To open a bank account for a Proprietorship, proprietor must provide two forms of registration along with the PAN Card, ID and address proof of the owner. Examples of forms of registration are, service tax or GST registration, MSME registration, Shop & Establishment Act registration or any other as provided by the RBI.
Generally, it takes 15 days to set-up and start functioning a sole Proprietorship. It is simple and cheaper which makes sole Proprietorship popular widely used business structure.