In India Sole Proprietorship is very commonly selected by the businessmen. Sole Proprietorship is form of business viz. easy to manage with less tax compliance. This form of business has proven to be most accommodating and profitable for micro and small businesses.
Person owing the business is known as proprietor, there is no distinction between the business and owner or proprietor, because the owner is whole and sole of the company, whose liabilities are unlimited towards the company. In case of arrival of any issues proprietor is personally liable for those as proprietor and proprietorship are considered equal. The documents like PAN, Aadhar-card or other of proprietor are used as basic documents for business registrations and licenses.
Sole Proprietorship has advantages as well as disadvantages:
- Sole Proprietorship is quite easy to setup, the proprietor has to do registrations and obtain license as per the nature of his business.
- This form of business registration involves less tax compliance and less rules and regulations to be followed. Also the annual return of proprietor and company can be same.
- The process of liquidation or say dissolution is also easy in sole proprietorship. Business can be transferred only at proprietor’s will.
- As the owner and business are same the liability of proprietor is also on stake at times.
- Raising funds from various financial resources is also not easy as the company is not separate legal entity and is connected to the profile of proprietor. So raising funds on large scale is difficult.
- This form of business is suitable for micro or small businesses.
Although sole proprietor does not require any specific registrations, a few registrations are advised to make the business function smoothly.
Registering as SME (Small and Medium Enterprise): You can register as Small and Medium Enterprise (SME) under the MSME (Micro, Small and Medium Enterprises) Act by filing an electronic application. Registering as SME is highly beneficial, especially at the time of taking loan for business.
Shop and Establishment Act License:
According to the local laws, it is required to obtain this license. It is issued by the municipal party based on the number of employees.
Food and Drug License:
( Note -If u are deal with in Food Items then only apply)
Food Safety and Standards Authority of India (FSSAI) FSSAI is an autonomous body established under the Ministry of Health and Family Welfare, Government of India, that monitors and the food business in India
It can be done via the GST portal and the GST number is received within 3-4 days of submitting the application. Documents required for GST registration are:
- Pan Card of the proprietor
- Photo of the proprietor
- Aadhar Card of the proprietor
- Electricity bill or Rent Agreement
- Bank statement copy
Trade mark: As Sole Proprietorship form of business don’t have separate legal entity, to obtain trade mark is suggested for the sole proprietors. Trademark is a special unique sign like designs, pictures or even expressions that are used to identify goods or services from a certain company and it also differentiates products or services from one company to the other company
Benefits of trademark registration in India are:
- Legal protection
- Product differentiation
- Brand recognition
- Creation of an asset
- Business valuation and goodwill