SOLE PROPRIETORSHIP- AN OVERVIEW

Sole proprietorship is a form of business organization in which an individual introduces his own capital, uses his own skill and intelligence in the management of its affairs and is solely responsible for the results of its operations. The individual may run the business alone or may obtain assistance of employees. It is the first stage in the evolution of forms of business organization. Following registrations can be used to show the existence of your proprietary Business are as-

  • Professional Tax Registration
  • Gst Registration
  • Shop and Establishment Registration
  • Trade License

sole proprietorship firm registration in new delhiSole Proprietorship or individual proprietorship is the simplest and oldest form of business organization. Sole proprietor receives all the profits and risks all of his property in the success or failure of the enterprise. The sole proprietor is not only the exclusive owner but sole founder and controller too. He alone owns and controls the business and bear its losses.

DEFINITION OF SOLE PROPRIETOR

A sole proprietor is the sole owner of the proprietorship business. Hence, a business will be carried forward by making new bank account for the business and GST registration will be done by using PAN and Aadhaar of the proprietor. The proprietor is completely responsible for all the assets and liabilities of the business.

WHO CAN OPT FOR SOLE PROPRIETORSHIP?

Any person who wants to start a business with less investment can opt for this type of business form. It can be started in a time span of 10-15 days. Also, the control in the business is solely in your hands.

FEATURES OF SOLE PROPRIETORSHIP

The essential features of sole proprietorship are as follow: –

  1. EASE OF FORMATION-

An ideal form of organization is one which can be brought into existence with least difficulty. It is one of the good form of organization with the ease of formation and involves the least expenses in formation and with minimum of legal formalities.

  1. EASE OF RAISING CAPITAL-

It is one of the another important feature of sole proprietorship. The facility of raising the required amount of capital is considerable, but where a large amount of capital is required, it ensure that investors in the business concerned are assured of safety of investment, fair return on investment and transferability of the investment.

  1. OMIT TO LIABLITY-

In sole proprietorship forms of business organization, Owner i.e. sole proprietor have limited liability. This would mean that in case of insolvency or winding up the liabilities limited to the extent of amount contributed by them.

  1. DIRECT RELATIONSHIP BETWEEN OWNERSHIP, CONTROL AND MANAGEMENT-

In sole proprietorship form of business organization, there is direct relations between ownership, management and control because the complete control is in the hand of individual (owner) itself.

  1. FLEXIBILITY OF OPERATIONS-

In sole proprietorship form of business organization, it gives you maximum flexibility and adaptalibility. This means that organization should lend itself to change and adjustment without much difficulty.

ADVANTAGES OF SOLE PROPRIETORSHIP

Following are the advantage of sole proprietorship are as follow-

  • EASY TO FORM AND WIND UP
  • DIRECT MOTIVATION
  • QUICK DECISION AND PROMPT ACTION
  • BETTER CONTROL
  • EASY DISSOLTION

DISADVATNAGE OF SOLE PROPRIETORSHIP

Following are the disadvantage of sole proprietorship are as follow-

  • LIMITED FINANCE
  • UNLIMITED LIABILITY
  • LIMITED SCOPE FOR GROWTH
  • UNCERTAINITY OF DURATION
  • LIMITED MANGERIAL SKILL

REGISTRATION PROCEDURE FOR SOLE PROPRIETORSHIP

The procedure for incorporating a sole proprietorship firm is-

  • Applying for PAN card.
  • After obtaining a PAN card, or if the proprietor already has a PAN card, the next step is to keep a name for the sole proprietorship business.
  • The next step is to open a bank account in the name of the business. All the transactions of the business will be through this bank account.
  • Though no specific registration is required for starting a sole proprietorship firm, certain basic registrations are required to be obtained by a sole proprietorship firm for doing business. The basic registrations required by a sole proprietorship are-
  • The proprietor needs to obtain the Registration Certificate under the Shops and Establishment Act of the state in which the business is located.
  • The sole proprietorship should also register for GST if the business turnover exceeds Rs.20 lakhs.
  • The sole proprietorship can also register as a Small and Medium Enterprise (SME) under MSME Act, though it is not mandatory, it is beneficial to be registered under the same.

Documents Required for Sole Proprietorship

The documents required for registration of Sole Proprietorship are-

Aadhaar Card.

PAN Card.

Registered Office proof.

Photograph of Office etc.

Checklist required for Sole Proprietorship

PAN Card of the proprietor.

Name and address of the business.

Bank Account in the name of the business.

Registration under the Shop and Establishment Act of the respective state.

Registration under GST, if the business turnover exceeds Rs.20 lakhs.

 

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