Also known as individual entrepreneurship or simply proprietorship, this kind of a business is owned by an individual. This business does not have any separate identity under the law and can also be operated under the name of its proprietor. Sole proprietorships are often opted for by individual consultants, freelance designers and writers or small businesses such as local grocery shops.
Benefits of a Sole Proprietorship
Sole proprietorships are easy to establish and inexpensive to create. It can be started in a time span of 10-15 days. The only fees involved are those needed to register your business name, and to attain the appropriate licenses and permits.
They are easy to operate and a simple and flexible way to scale operations.
There is no limit to the number of people you can employ as a sole proprietor, and this allows you to grow your reach and your team without taking the leap to formally incorporating your business.
Sole proprietorships are automatically tied to you personally, and this gives you complete control over the company and its trajectory. There is no need to make decisions based on the wants of shareholders or the requirements of legal partners. All profits belong to the proprietor.
Under this system, compliance requirements are minimal.
Since sole proprietorships are an unregistered form of entity, there is no database maintained by the Government with a list of all proprietorships. Hence, proprietorship firms are more private when compared to a company or
The ability to operate as a sole proprietor, without formal registration or high costs, is especially beneficial if you’re building your startup as a side gig, outside your regular day job.
The procedure for incorporating a sole proprietorship firm is-
- Applying for a PAN card.
- After obtaining a PAN card, it is essential to find a name for your business. Check out our Name Suggestion platform here.
- The next step is to open a bank account in the name of the business via which all business transactions shall be made.
- Some 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 lakh.
-You can also register as a Small and Medium Enterprise (SME) under MSME Act. This is not mandatory but is definitely beneficial.
Documents Required to set up a Sole Proprietorship
We require you to submit/upload the following documents to get your sole proprietorship registered:
- Address and identity proof
- PAN card, KYC documents
- Rental agreement or sale deed (in case of Shops & Establishment Act Registration).