Know All About Sole Proprietorship Firm
Sole proprietorship can be called the simplest form of business. As such, a sole proprietorship is not a legal entity. The term is basically used to refer to owners who have their own businesses and in these cases they happen to be responsible for the debts incurred by their business as well.
Such a business can operate either under a name chosen by the owner or under the name of the owner itself. The name in these cases is just one intended for purposes of trading. It does not really mean that the business is a legal entity that happens to be separate from its owner.
There are several reasons as to why sole proprietorships have become as popular as they have been. As has been said already, this form of business is the simplest out there. It is also really easy to set up such a business and you need little money in order to set up such a company.
If you wish to register a sole proprietorship, all you need to do is register your name and get a license that allows you to do business in your immediate locality. One of the major issues of such a business though is that you are always held personally responsible for all the debts incurred by your business.
What is sole proprietorship firm registration?
It needs to be mentioned in this context that in India it is not mandatory for you to register your sole proprietorship business. Now you may ask why is it that you should get your sole proprietorship registered. There are two major benefits of such a step –
- Your business gets a proper identity and
- It gets a lot easier to open a bank account in the name of your business while it happens to be registered;
When you get your sole proprietorship registered your business would get a separate identity that would mark it out against other types of companies such as partnerships. One of the biggest issues of sole proprietorship is that it can be quite hard to open a bank account in the name of your business.
Normally these businesses do not really have any recognition from a government and this is what makes it so hard for owners like you to prove to banks that your business exists. Once you register your business it gets a definite identity from the government and thus it becomes a lot easier for you to open a bank account in the name of your business.
Advantages and benefits of a sole proprietorship
As a kind of business entity you get a number of benefits by starting a sole proprietorship. You would already know by now that these businesses are easier to start and you do not need a lot of money to start such a company.
This particular type of business also comes with a lot less regulatory compliance related requirements. It is also easier to name such a business as opposed to other kinds of businesses. Since you are the only owner in such a company you have complete control over the same.
It is also a lot easier to close a sole proprietorship company.
Such a company does not need to file any income tax separately. This is applicable even when you have registered it. All you need to do is file your individual tax return. In that you can easily disclose how much profits you have made from the business or how much loss you have incurred. Normally in case of partnerships a separate return has to be filed for the business.
However, if you have registered your business as per GST (Goods and Services Tax) then your return has to be compliant with GST requirements as well.
Coming to the costs of starting such a business they are basically next to nothing. The only money that you may have to spend in such a business is in order to get a license for your business.
It also needs to be mentioned in this context that since the compliance related requirements in these cases are minimal you can save a whole lot of money in that regard as well.
As has been stated already, it is pretty easy to name a sole proprietorship. You can give your company any name as long as you are not violating a trademark held by another company.
You can always start off your business with a unique name and once you feel you have earned a sufficient amount of goodwill you can get your company registered in that particular name.
Documents required for proprietorship registration
In order to register a sole proprietorship you need to furnish the following documents:
- Self attested copy of your PAN (Permanent Account Number) Card
- Self attested copy of your Aadhaar Card/ Voter ID/ Driving License (DL)/ Passport as address proof
- Electricity bill and Rental agreement of premises where you want to setup your business (if it is rented premises)
- Tax paid bill (if it is own premises)
- Bank statement required for GST registration or MSME registration
- Passport size photographs
How to register a sole proprietorship in India?
There are 3 ways through which you can register a sole proprietorship firm and get an ownership certificate in Bangalore or any other cities in India as per the business requirements.
- Obtain a CA (Chartered Accountant) Certificate for Opening a Current Bank Account
- Obtain a Labour Certificate from the State Labour Department (or Municipality)
- Obtain a MSME/ GST Certificate Based on Nature of Business
Get a CA Authorized Certificate
In First, you have to obtain a Chartered Accountant (CA) Certificate for your business to open a Current Account in any nationalized bank. It is mandatory for every proprietor to acquire the CA authorization letter for his/ her business name.
Get a Labour License Certificate
Secondly, you shall have to register and acquire one Shops and Establishments registration license from State Government under the Karnataka Shops & Establishments Act, to give a legal name to your business.
If you have a shop that serves as your place of business you can register your sole proprietorship under the Shop and Establishment Act. In this case the term shop means a place where you sell goods on a retail or wholesale basis. It could also be a place from where you provide services to your customers. You can also go for this particular way if you have any of the following that you use for the purpose of business:
- Store room
In this case the application needs to be made to your local municipal body.
If you do not know how to register a sole proprietorship business in Bengaluru you need not worry on this regard as these days there are a number of companies that are willing to help you to register your company. You can be sure that they would help you in each step of the way.
We are also a leading company registration service provider in Bangalore offers various services in relating to business consultation; if you need our help, we will deliver you the best services on the basis of your requirements.
Get a MSME/ GST Certificate
And Thirdly, you can take a Central Government’s GST/ MSME registration certificate to avail the benefits and subsidies from them on the basis of SME criteria.
In case of MSME registration, you can register a sole proprietorship through Udyog Aadhaar (now it is changed to Udyam Registration) under the Ministry of MSME (Micro, Small and Medium Enterprises) of India. Udyog Aadhaar can be described as a unique identification number that is provided to business owners by the Ministry of MSME. Just like all other kinds of companies you can apply for an Udyog Aadhaar as well. Once you do this you would be eligible to receive all the benefits and facilities that the MSME Ministry provides. Apart from that this would provide your business a unique identity as well.
Or if you are getting registration under GST law, in this case your business is to get registered through GST. Normally you should apply for GST if you happen to deal in goods and services. As you may know, GST has substituted the old system of registering for service taxes and VAT (Valued Added Tax). This is indeed a great method in which to get your sole proprietorship registered. However, you also need to keep in mind that there are plenty of GST related compliance issues that you would have to adhere once you choose to go this way. For example you have to compulsorily take taxes from your buyers and then file the applicable returns.