Sole proprietorship, as defined by the Govt. of India, is a “one-man organization where a single individual owns, manages and controls the business.”
One of the primary benefits is the ease of formation since government registration is not required. There are no fees to be paid for starting a one-man business on your own, and there is no government regulatory paperwork and compliance to be fulfilled. There are no minimum capital investment requirements, and the proprietor has full control and ownership stake.
You get to keep whatever profit or income you generate. Furthermore, the tax benefits of sole proprietorship prevent double taxation of the firm. You will file returns and pay taxes only in your personal name. There are no separate income tax returns to be filed and no tax to be paid by the firm.
Here in this article, let us understand the things to know before proprietorship firm registration
Things to know while registering a Sole Proprietorship firm
- A Sole Proprietorship is a popular form of unregistered business. It does not require any registration as it is considered as an extension of the business of the owner.
- It is not governed under any specific la and there are no specific procedures for its registration. However, the sole proprietorship business can be established through opening a Bank account and obtaining registration under different acts like GST, MSME, etc.
- On the contrary, the Companies Act 2013 governs a One Person Company hence its registration is mandatory under the said act. The procedure laid down under the Companies Act 2013 and Rule 8 of Companies (Incorporation) Rules, 2014 has to be followed for registering a One Person Company. The One Person Company has to be first registered as a Private Limited Company. Further, it can proceed for registrations under different Acts.
Registration For Sole Proprietorship Business in India
You don’t need to register your sole proprietorship in India. But in order to receive payments in the name of the business, you need to open a current account in a bank. For this, you will need proof of the existence of the firm and the address proof. Documents needed include:
- Pan card and ID for address proof of proprietor.
- Business address proof (eg: electricity bill in your name, or electricity bill + registered rental agreement, etc.)
- Two government registration documents confirming name and address of business (shop establishment license, service tax registration, VAT/CST, etc.)
- CA Certificate – You can get this from any CA. They might charge you a nominal fee for giving you a certificate.
Here in this article, we have understood the important things to know before registering a sole proprietorship firm.
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