Majority of the businesses in India are unregistered with many being operated as a sole proprietorship firm business. A sole proprietorship is one of the easiest and simplest form of business entity to register and maintain in India. There is no formal sole proprietorship registration and to start a proprietorship only PAN number for the Proprietor, certain licenses and capital is required.
In a Sole Proprietorship, only one person controls the business. Therefore, the owner and the business are considered as one entity. In other words, there is no difference between the sole-proprietorship and its owner.
Features of Sole Proprietorship
Some unique features of sole-proprietorship are:
- Full control over the business.
- Unlimited liability of the owner.
- No perpetual succession.
- Complete freedom to make decisions.
- No separate legal entity.
Benefits of Sole Proprietorship
- A sole-proprietorship business has the following benefits.
- Ease of formation.
- Tax benefits such as paying taxes at individual tax rates, and not corporate rates.
- Lesser compliance requirements.
- Fast and easy decision making.
Documents for Registration
There is no formal process for registering a Sole-proprietorship. But, you can register your business under various other acts such as:
- Shops and Establishments.
However, please note that you don’t need to register under all these acts. The kind of registration will depend upon the type of your business. It will also depend on your annual turnover. This is because there is a threshold limit which exempts you from compulsory registration until you reach a specific turnover.
Fee for Registration of Sole Proprietorship
The government fee starts from Rs. 500 and the professional fee starts from Rs. 2500 depending on your registration needs.