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Proprietorship

Embracing Entrepreneurship: Unveiling the World of Proprietorships

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Proprietorship

A sole proprietorship form of business is a common business structure in India

A sole proprietorship business is established and managed by a single person. This type of business form is best suitable for individuals wishing to start a business with less investment. Generally, it does not require any registration as such. 

A sole proprietorship business can be started from home or on a premise with a minimum amount. The control of the business is solely in the hands of the single proprietor/owner who invests in the business. He bears all the losses of the business and enjoys all the profits. He can appoint persons for conducting the business, but the ownership will rest solely with him.

Many local businesses such as grocery stores, parlours, boutiques, retail stores, etc., can be established as a sole proprietorship firm. Even small traders and manufacturers can establish a sole proprietorship firm

Unlocking Growth Potential with aProprietorship

Advantages of a Proprietorship

Less compliances

The sole proprietorship business can be started easily by just one person. There is minimum compliance that is required to be adhered to get it incorporated. This form of business is economical as it is relatively less expensive to start than a company or LLP.

Control of the business

The sole proprietor will have complete control over the business. He will look after all the aspects of the business. Since only one person is running the business, secrecy can be maintained.

Quick decision making

The sole proprietor takes all decisions of the business. The decision making rests with a single person. Thus, the decisions can be taken quickly and immediately without the need for consulting anyone.

Disadvantages of Sole Proprietorship

Unlimited liability

There is an unlimited liability on the sole proprietor. He is personally liable for all the transactions he enters in the business. If any loss occurs, he will have to bear the whole loss out of his personal estate.

No perpetual succession

There is no perpetual succession which means it can come to an end if something happens to the sole person taking care of the business. It can shut down at any time. This makes the business unreliable and difficult to gain public trust for entering into agreements or contracts to expand the business.

Difficult to raise funds

Since a single person manages the business, it is not easy to raise capital. The capital of the business is from the investments put in by the sole proprietor. The sole proprietorship firm has no separate legal entity status from the owner. As it can come to an end at any time and there is no separate entity, it is difficult to obtain funds from third parties.

Why Choose Sandeep Nalla And CO. for Your Proprietorship

We help you decide on what kind of entity is suitable to the taxpayers based on the Business Requirements, Nature of Transactions, Budget Expectations and we help you on Post formation services like required Registrations and timely guidance on further compliances of Income tax and GST.

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The procedure for incorporating a sole proprietorship firm is

01

Procedure

Applying for PAN card

02

Procedure

After obtaining a PAN card, or if the proprietor already has a PAN card, the next step is to keep a name for the sole proprietorship business.

03

Procedure

The next step is to open a bank account in the name of the business. All the transactions of the business will be through this bank account.

04

Procedure

Though no specific registration is required for starting a sole proprietorship firm, certain basic registrations are required to be obtained by a sole proprietorship firm for doing business. The basic registrations required by a sole proprietorship are-
    • The proprietor needs to obtain the Registration Certificate under the Shops and Establishment Act, i.eTrade Licence, Labour Licence, of the state in which the business is located.
    • The sole proprietorship should also register for GST if the business turnover exceeds Rs.20 lakh.
    • The sole proprietorship can also register as a Micro, Small and Medium Enterprise (MSME) under MSME Act, though it is not mandatory, it is beneficial to be registered under the same.

The documents required for registration of Sole Proprietorship are

  • Aadhaar card.
  • PAN card
  • Registered office proof
  • Bank account.

Embracing the Proprietorship

Take the First Step Toward Growth and Stability with Sandeep Nalla And CO

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