In the eyes of law, the proprietor and the business are the same. It is very suitable for online service provider or product trader as it helps a small business grow through the online market.
Procedure of Registering sole proprietorship
There is not any specific way to register for a sole proprietorship. A current account needs to be opened with a bank. But the following has to be maintained. Depending on the type of business, a sole proprietorship can be classified under service provider or product dealer.
- In case the business deals in providing services such as online consultancy, website development, digital marketing, ecommerce, etc. In such cases, to open a current account, service tax certification and chartered accountant certification regarding nature of business are required.
- If the business deals in product selling, such as ecommerce websites, import, export, selling on ecommerce sites. The business needs shop act license or trade license and VAT or salex tax registration.
For all registration, help from a CA is most preferred.
Features of sole proprietorship
- One man show
- Unlimited liability
- Maximum and minimum member is 1
- Easy setup and closure
- No separate legal entity
- Nominal cost
Advantages of a sole proprietorship
- Easy to setup
- Fuss free as only one person
- Quick decision making
- Less formalities
- No unemployment tax to be paid
- Business and personal assets can be mixed together
- A proprietorship having less than 2 lakh capital does not have to pay any taxes.
Documents required for registering a sole proprietorship
- Id proof
- Address proof
- Business place address proof
- For VAT, a security amount as fixed deposit
Cost of registration
Total costing for registration sums to approximately 10,000 TO 15,000 INR.
Time for registration
Time taken for registration is about 10-15 days with the registrar.