Sole Proprietorship Registration

A sole proprietorship is one among the oldest types of business, additionally called a private businessperson or proprietorship or sole trader could be a business entity that's unregistered and is in hand, managed and controlled by one person is termed as its sole proprietorship. this can be one among the foremost common types of business in India employed by small and little business operators. this way of business is incredibly simple to start out and shut and have lowest regulatory compliances. A Sole proprietorship doesn't provide advantages like company standing, separate legal identity, perpetual existence, freelance existence, because it is in hand and managed by one person. so proprietorship is suited just for unorganised or little business.

There is no specific mechanism for registration of a sole proprietary in India, so the existence of proprietorship should be established through different registrations like tax registrations, Labour connected registration, retailers registrations and different statutory business registrations that a business is needed to own as per the applicable provisions of the law. samples of such registrations square measure of GST registration or MSME registration (Micro little Medium Enterprises), retailers & establishment Registration, manufacturing plant Licence, i.e. Code etc. be obtained within the name of the man of affairs or the proprietorship so as to establish that the proprietor is operating a business as a sole proprietorship. The name of a proprietorship could also be totally different from that of the proprietor, however, the PAN they share is same.

Benefits of registering Sole Proprietorship:

The easiest form of business: We all come across various shops in our locality carrying out small business operations. All these are sole proprietorships. It is very easy to form this business. They don't involve any complexities and can be handled by a single person in a comfortable manner.

Easy to start: These businesses do not require mandatory registrations under any law. Registration for only those licenses is required that are specific to the nature of business. So any person can easily start the business with a trading name of his or her choice only it should not clash with any brand name. It also does not require approval from the registry.

Less investment: Sole proprietorship can be started with a minimum amount of capital at the initial phase. This turns out to be an exciting opportunity for someone with low funds and wants to set up a business.

No sharing of profits earned: Sole proprietor is the person who owns and manages the business on its own. So the profits earned will also be enjoyed by him alone.

Less legal compliances: Sole Proprietorship is not governed by any specific law so there are fewer legal compliances. They don't have a predefined Certificate of Incorporation or Registration Certificate. So the compliances depend upon registrations or licenses taken by a particular sole proprietorship. Eg. If sole proprietorship registers itself for GST law, then it will have to comply with the GST return filing etc. there is no requirement of uploading the Annual report or other reports on the MCA website.

Secrecy of information: In a sole proprietorship, the information is not made public.unlike other companies, like Limited Liability Partnership, where financial statements, audit reports are made public for users through the MCA website. The financial reports remain in private hands.

Self-decision making: Since Sole Proprietorship is managed and controlled by a single person so there will be no conflict of ideas and decisions.

No specific audit requirement: It is not mandatory for a sole proprietorship to get its accounts audited for every financial year. The audit will depend upon the nature of the business and the threshold turnover limits specified for the conduct of the audit. Tax Audit is required if turnover/ sales exceed Rs.1 CR. When it comes to professional services an audit is required if receipts exceed Rs. 50 lakh. GST audit is required if the turnover exceeds Rs.2 crores.

Lesser Income Tax: Since Sole Proprietorship involves only a sole proprietor, hence no separate tax is required to be paid by it. They both are considered the same for the purpose of calculation of tax liability. The Sole Proprietor is required to file his normal return and show the profits earned in the business in that return itself.