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Sole Proprietorship Registration

Sole Proprietorship Registration

WHAT  IS SOLEPRIPETERSHIP  ?

A Sole Proprietorship, also known as a sole trader or a proprietorship, is an unincorporated business with only one owner who is responsible for paying personal income tax on the company’s profits on its own slab rate of Individual Tax Slab. Since it’s not essential to register a distinct business or trade name, many sole owners operate under their own identities.

ADVANTAGES OF SOLE 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.

  • Control of the business

The sole proprietor will have complete control over the business. He will look after all the aspects of the business. 

  • Risk and reward 

A sole proprietor has complete ownership over the profits or losses from their firm’s operations.

  • Quick decision making

The sole proprietor takes all decisions of the business. The decision making rests with a single person. 

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. 

  • 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. 

  • Lack of Resources 

It is challenging to raise vast amounts of capital in a sole proprietorship compared to a partnership or company. This form of business runs mainly on personal savings and borrowings made by its owner. Lack of adequate finances can become an obstacle in growing the business

Types of Registration that a Sole Proprietor can have as per their business requirements

  1. MSME Registration

 An individual cannot apply for MSME registration. A proprietorship, partnership firm, company, trust or society with an investment below Rs.50 crore and annual turnover below Rs.250 crore are eligible for MSME registration.

  1.  Shops and Establishments Registration 

Any individual who plans on starting a Commercial Establishment that falls under the purview of the Act must file for registration within 30 days of commencing their business (days of registration may vary from state to state). This registration is mandatory for several reasons, including being necessary for opening a current account in a bank. The Shop Establishment License works as an essential license or proof of business that companies need to apply for other registrations and loans.

  1. FSSAI Registration 

 One of the most significant registrations that must be obtained in order to start a restaurant, bakery, hotel, or food stall in India is an FSSAI registration. To operate their food company, individuals who are involved in the production, distribution, and storage of food goods or articles are also legally needed to be registered with the FSSAI.

  1. GST Registration 

Threshold Limit for GST Registration

  • The threshold limit is Rs. 40 lacs or higher for the manufacturing sector.
  • The service sector has a threshold of Rs. 20 lacs or higher.
  • The threshold limit is Rs. 10 lacs or more for special category states.

 Special Category States include Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya,              Mizoram, Nagaland, Tripura, Sikkim, and Uttarakhand.

  • Jammu and Kashmir and Assam are two particular category states that chose to have a             threshold limit of Rs.40 lacs for commodities.
  • Puducherry, a regular category state, opted for a threshold limit of Rs. 20 lacs for goods.

Documents Required for Sole Proprietorship

 The documents required for registration of Sole Proprietorship are-

  1. Aadhaar card
  2. PAN card
  3. Photograph
  4. Registered office proof (Utility bill/wifi bill not older more than 2 months)
  5. Bank account.

Timelines for Sole Proprietorship Registration

The Sole Proprietorship requires obtaining a PAN card for a proprietor, opening a bank account in the name of the business, a Certificate of Registration under the Shop and Establishment Act of the respective state and GST Registration. The registration process takes approximately 10 days, subject to departmental approval and reverts from the respective department.