A sole proprietorship is known as a business, which is owned and controlled by an individual owner. It is recognized as a firm or a limited liability partnership, which has no partner intervention in the business. Sole proprietorship as per its legal status can be defined as follows:
- It is treated as the same entity as the business owner
- Such business owner has an unlimited liability since he is liable for all debts and losses
- This business can sue or be sued in the name of the owner
What is sole proprietorship registration?
Sole proprietorship registration online is one of the compliance’s. Known as the most popular business structures in India that have minimal compliance’s. This type of business structure is wherein a person manages the entire business affair from scratch. Registration of sole proprietorship is generally not required unless the owner wishes to do so.
How to check proprietorship status?
In case you wish to check the proprietorship status of a firm, there are a few steps aligned for this. The government portal named as Ministry of Corporate Affairs (MCA) contains details of all the companies that are incorporated in India. It includes details for all types of companies as well as of Limited Liability Partnership (LLP).
The official site of MCA lets one check the company registration number, company type, date of establishment, company charges, directors of the company, etc. from the site. The site also presents details of balance sheets and other company documents along with annual returns. The steps to check sole proprietorship company registration in India on MCA:
- Step 1: Enter the MCA website
- Step 2: Click on the ‘MCA Services’ tab and select ‘View Company/LLP Master Data’ from the drop-down
- Step 3: Fill in the company CIN along with the captcha code. Press ‘Submit’.
CIN code can also be searched by clicking on the search icon that sits beside the ‘Company/LLP Name’ field.
What are the Advantages of Sole Proprietorship?
An individual who wishes to set up his own business with a minimal investment have the option of sole proprietorship. This business type has a range of benefits that include the following:
- Quick to start:such firms can be started within a time period of 10-15 days. Further, the control of entire business is within the hands of the single owner.
- Less compliance’s: Sole proprietorship business requires minimum or no compliance to start and function. It is considered as economical and less expensive endeavor to setup, start, and register sole proprietorship Indiaas compared to a company or LLP.
- No external intervention: Right from taking decisions for expansions to making any business changes, the sole owner exercises complete control. There is no intervention, which also contributes to secrecy within the business.
- Easy decision-making: For asole proprietor, it is easy and quick to take all decisions without the need for consulting anyone. The onus of profit and loss as an outcome for such decision also rests with the owner.
Disadvantages of Sole Proprietorship
Along with some perks of easy sole proprietorship registration comes some disadvantages. These are outlined below;
- Unlimited liability: While there are benefits and profits, the entireliability also falls on the sole proprietor. He is held liable for all the transactions and has to bear the whole loss by selling off his personal estate.
- No succession:If in case something untoward happens, the business comes to an end since there is no other person involved in the business handling. It can shut down with a lot of debt or due payments which makes it unreliable and difficult to gain public trust for signing agreements or contracts.
- Fundraising is a challenge: Post sole proprietorship firm registration, fund raising comes into picture, especially if one wishes to expand the For such businesses, it becomes a challenge to raise capital since such firm has no separate legal entity status from the owner. Since its longevity is questionable, inviting sponsors and third parties for funds become difficult.
How to do sole proprietorship registration online in India?
Sole proprietorship company registration in India is a simple and straightforward procedure which involves the below given steps:
- Firstly, it is important to own a PAN card. In case the owner does not have it, one needs to apply for it.
- Once the PAN card is issued, next step is to decide on a name for the sole proprietorship business.
- Next phase involves opening a bank account using the business name that has been finalized. It is important to keep these in sync since all the transactions of the business will be through done the bank account created.
- However, there is not much of a process involved in obtaining registration for starting a sole proprietorship firm, still a few basic registration steps are required for starting the business. A sole proprietorship must complete the following fundamental registrations:
- Sole proprietor must obtain the Registration Certificate that is covered under the Shops and Establishment Act of the state wherein the business is located and will be conducted.
- Such firms must also register for GST in case its turnover surpasses a revenue generation worth Rs. 20 lakh.
- A sole proprietorship can register as a Small and Medium Enterprise (SME) which is covered under MSME Act. This step is optional and not mandatory but it is certainly a beneficial move if one proceeds with such registration.
Documents Needed To Register A Sole Proprietorship In India
Important documents needed for sole proprietorship registration online in India include Aadhaar Card, PAN Card, Registered Office proof and a Bank Account.
Checklist Items for a Sole Proprietorship Registration
Before proceeding with the registration process, a business owner must collect all the documents and paperwork needed:
- Proprietor’s PAN Card
- Business name and address
- Bank Account that should be in business name
- Registration document as required under the Shop and Establishment Act of the state where the business will be conducted or where it is based.
- GST registration in case the turnover exceeds Rs. 20 lakhs.
Compliance’s required for Sole Proprietorship
For a sole proprietor, it is a mandate to file Income Tax Return on a yearly basis. Additionally, the firms need to file GST Return in case they are registered under GST. Such businesses also stands accountable for TDS deduction and filing of TDS return in case it undergoes Tax Audit.
- Sole Proprietorship Registration must be done within 10 days approx..
- It requires opening a bank account with the business name
- Must hold Certificate of Registration under the Shop and Establishment Act of the respective state
- Must present GST Registration and filing of ITR
Why choose ucomply for Sole Proprietorship Registration in India?
At ucomply, we have a team of dedicated professionals who have years of experience in handling sole proprietorship company registration in India. With our expertise, we make the company set-up and documentation process easy for our clients. Click on https://ucomply.in/service/sole-proprietorship-registration-in-india to know more about our services and their benefits.
FAQs
Who is eligible to start a Sole Proprietorship?
A Sole Proprietorship can be started by any individual who wishes to start his business with less investment.
How long does it take to get a Sole Proprietorship registered?
The process of sole proprietorship registration online takes approximately 10 days, which again depends on departmental approval and response from concerned department.
What all businesses can be run as Sole Proprietorships?
Commonly run sole Proprietorshipsbusinesses include bookkeeping, financial planning, an interior designer, repair services, catering services, housecleaning services or freelance writers etc.
What all documents are required for registration of Sole Proprietorships?
To register sole proprietorship India, the owner needs a few documents that include Aadhaar Card, PAN Card, a proof for registered office and a bank account.
How can I convert a Sole Proprietorship to a Private Limited Company or Partnership?
To transition from a Sole Proprietorship to a private limited company, first step is to form a private limited company and take over sole proprietorship via Memorandum of Association (MoA). Subsequently, the owner can transfer all benefits and liabilities to the newly formed limited company.
How long does it take to register a sole proprietorship?
Depending on the nature of statutory registration which may vary as per GST, MSME, etc., it takes 5-10 working days which is again subject to Government processing, public holidays, approval time, etc.
How much do I need to pay for Sole Proprietorship firm Registration in India?
In India, total fees for registration of Sole Proprietorship Firm in India is INR 1,999. This cost includes government and professional fees as well as of the mandatory registrations such as GST registration, MSME registration, etc.
Is it mandatory for a sole proprietorship to register for GST?
A sole proprietorship must register for GST in case its business turnover surpasses INR 20 lakh. As an alternate, a sole proprietorship can register as a Small and Medium Enterprise (SME) under MSME Act for added benefit.