Registration of Proprietorship Firm

What is sole-proprietorship business?

The sole proprietorship business should be owned by individual person, who are not looking for any market support and are ready to invest money into the business and take risk. This kind of business is suitable for small budgeted business.

How to start the business?

1) Select a Business name.

2) Select a location or address as a place of commencing business.

3) Get a GST number by getting registration for your firm.

4) Get the firm register as MSME. You are now ready to commence your business legally.

1. Trouble-free Establishment :-

The sole proprietorship business is very easy to establish. It doesn't require much legal formalities. And there is no need to get into any agreement with some other person or go through registration procedures.

2. Effortless Functioning :-

The proprietor themself has the complete control and, therefore, he/she doesn't require to discuss their decision with any other person, Moreover, he/she knows their employees personally and he/she is the only person dictating the entire team, therefore, he/she is able to ensure that they work as a team. Also the decisions made are quick and easy to bring in force.

3. Sole Profit Entitlement :-

No other business, other than a sole proprietor business, rewards the owner with full profit entitlement. In all the other business like partnership, LLP, or a company the gains are always distributed among the partners or the shareholders of the business at a predefined fix ratio.

4. Taxation Advantage :-

The proprietorship business has many different taxation advantages :-

The proprietorship business doesn't require any complex compliance ordinances, it's usually very minimalistic because of the fact that the proprietary business is not registered with any Government authorities like the Ministry of Corporate Affairs. Further, the proprietor is free from Double- taxation, unlike all the other kinds of businesses. Also, there is no need of filling a separate tax and the proprietor is only required to file income tax returns if the firm has taxable income of more than Rs.2.5 lakhs per annum. All the Income Tax provision will be applicable as applicable to Individual person.

1. Risk of liability :-

In case of sole proprietorship business, the owner is not provided with limited liability protection. Hence, the proprietor has to bear all the loss and liability personally.

2. Lack of transferability :-

The sole proprietorship business doesn't provide the owner with the benefit of transferability, I.e. Any license or enrolment done in the name of the business cannot be transferred to any other person or entity.

3. No Separate legal entity :-

The sole proprietorship business is not a separate legal entity, i.e it will end with the proprietor. It doesn't have it's own existence.