One of the earliest and simplest business structures to establish in India is the sole proprietorship. A proprietorship is a form of business where the owner owns, runs, and controls the whole enterprise. There are extremely few compliance requirements because the proprietorship and proprietor are identical, making it simple to start.
A proprietorship cannot have additional partners or shareholders because the proprietor and the business are one and the same. Furthermore, the proprietor’s minimal liability from the business operations carried out under the sole proprietorship is unprotected. Therefore, small firms with no more than 5 employees are best served by this type of corporate entity.
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The proprietorship business has a single owner, who is the sole proprietor. Therefore, a business will be continued by opening a new bank account for it, and GST registration will be completed by using the proprietor’s PAN and Aadhar. The business’s assets and liabilities are entirely the owner’s responsibility.
We are not required to register as a sole proprietorship in India. A platform to check the status of a sole proprietorship does not exist as a result. However, once a proprietor has submitted an application for GST registration, the proprietorship’s GST registration and filing status can be checked on the GST Portal to validate its existence.
Sole proprietorship is a type of business entity in which a single individual owns and operates the entire business. In this form of business, the owner is personally responsible for all debts and obligations of the business, and they have complete control over its operations and decision-making.
If you want to own the business under your own legal name and under your own PAN number without getting into too many legal formalities involved in other constitutions, then this will be the fastest and cheapest form of business to start with.
The proprietor must acquire PAN and Aadhar in order to operate a proprietorship firm in India. The business owner must register for UDYAM, GST, and open a bank current account. The owner may additionally need to register under the Shops & Establishment Act in several states.
Depending on the business, the state, and the local rules, extra licences and permits can be necessary in addition to the aforementioned fundamental needs.
The following are some of the compliances that are applicable for a sole proprietorship:
In addition to the above, various other compliance requirements maybe applicable to the proprietorship based on industry and location.
Simple registration: Since the only proprietor is the same person who founded the business, there is no formal incorporation or dissolution process. To comply with Indian rules and regulations, the owner may need to secure specific registrations and licences before starting a business.
Lower compliance: Since the majority of proprietorships are simply registered with government agencies like Income Tax and GST, there would be less of a compliance burden. On the other hand, organisations like LLPs and companies that are registered with the Ministry of Corporate Affairs must submit a variety of statutory reports and are subject to annual audits by Chartered Accountants.
Simplicity: Since there are no shareholders, partners, or directors, the proprietor can easily run this business with the bare minimum of paperwork and authorization. Therefore, extremely tiny enterprises are best suited for this type of business structure.
Business decision: All business decisions are made by the proprietor in a sole proprietorship. No other person’s approval or consent is necessary. Consequently, a business owner usually has the ability to make swift judgements on his operations.
Complete authority: Since the proprietor is the only owner of a sole proprietorship. He or she has total authority over all resources, earnings, costs, and corporate activities.
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