Sole proprietorship is business organization which is handled by a single person, basically this is the only business nature which don’t requires much investment and also not any registration, all the things has to be managed by the single hand who is the owner of the premises. As the owner will be single person then all the profits and losses will be of the single person. Even the owner can appoint any other person for the purpose of management but legally the ownership will be of the proprietorship.
What is the advantage of Sole proprietorship?
Control on the business: –
As the ownership will be of the one person, the secrecy of the business will be maintained and the entire control of the business depend on the single person so as the result of that the process of decision making will be less and also the dependency will be less.
Less compliance need to be done:-
The sole proprietorship is the form of business which can be run by the single person and easily can be started and that is why there are so many less compliances to be done for the pursuance of the business.
As the sole proprietor no need much compliance so it is very cheap to be incorporated as compare to LLP or company.
What is the disadvantage of Sole proprietorship?
There are the unlimited liabilities on a sole proprietor as the entire workload is on a single person then he is the only one who liable for their all expenses or liability which is entered into his books.
There is no perpetual succession: –
If in future something will be happens with the sole proprietor then the business will be vanished or it can be shut down at the any time so this scenario is unreliable and never can get the public trust.
- Here is the necessary document which is necessary to have for being a sole proprietor.
- Aadhaar card
- PAN card
- Registered office proof
- Bank account
Here are the checklists required for sole proprietor
- PAN card of the proprietor
- Name and address of the business
- Registration under GST if the turnover of the business is greater than the amount of 20lakhs.
- Bank account on the name of premises.
- Registration of the respective state under the shop and Establishment Act.
Registration process of sole proprietorship
- Apply for PAN card.
- After having the PAN card of business also get the name for sole proprietorship business.
- Next step is to open a bank account on the name of business. And the entire transactions should be made by that account only.
- Although there is no need for any specific registration but these are the basic registration is required by the sole proprietor that is given below.
- If the business turnover exceeds 20lakh then the sole proprietor should register under GST.
- The sole proprietor can be registered under small and medium enterprises under MSME Act but it is totally optional as it is beneficial not the mandatory.
- The proprietors need to register under the shop and establishment Act. in the same state in which the business is located