Sole Proprietorship Registration and Characteristics
The simplest form of business is Sole Proprietorship; it is not a legal entity. A sole proprietorship can operate under the name of its owner or it can do business under a trade name. Sole proprietor can also be known by other names such as sole trader, individual entrepreneurship, proprietorship, individual trader and, combination of these names.
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The sole proprietorship is definitely a popular business form thanks to its simplicity, simple setup, and nominal cost. There is no separate registration for Sole Proprietorship, to establish the identity of Sole Proprietorship, the First and foremost requirement is having a PAN (Permanent Account Number) in the name of an individual who carry out the business, we at ReturnFilings.Com will apply for PAN on your behalf and thereafter provide registration under GST to carry out the trade and service activities, Obtaining Import Export Code (IEC) to carry out import or export activities if required, obtaining FSSAI Licence from Food Supply and Standards Authority of India to carry out merchandising in food related activities if required depending upon case to case basis, obtaining Udyog Aadhaar under Micro Small and Medium Enterprises (MSME) in order to avail MSME benefits, Obtaining TAN (Tax Deduction and Collection Account Number) to comply with taxation norms and ensuring proper compliance of TDS provisions.
Most of the business initially starts as sole-proprietorship in order to analyze the customer behavior and market scenario. Once this sole proprietorship forms pace with the market scenario and able to generate good profits then upgrade it to other forms of business such as Partnership Firm, Private Limited company incorporation etc.
A sole proprietorship can carry on business in its own name and also has option to choose and carry business using any trade name. Business starts under sole-proprietorship having a trade name that suits the nature of business will automatically benefit the sole-proprietor. This trade name based upon the nature of business will create an impact on customers and therefore goodwill can be easily set-up in the market.
A Sole Proprietorship characteristics is it can enter into contracts, engage employees, register themselves with various Government regulatory authorities such as obtain GST number, obtain TAN, obtain IEC etc as per the requirement of the business concern.
Sole Proprietor tax benefit is all the business carried on by sole proprietor is not distinguished and hence all the gain or losses account in its individual capacity. A sole proprietor needs to submit a tax return based upon its gain or losses in sole-proprietorship. A sole proprietor is personally liable for all its liabilities and therefore can be sued in its individual capacity. Finally, a sole proprietorship concern enjoys income tax slab rate of tax structure after clubbing its all income.
There are certain restrictions in sole-proprietorship business, mostly in the tendering process for award of contract in Government sector or other Public Sector Undertakings this form of business is not considered and usually, the corporate form of business is considered in awarding a contract. Government e-marketplace (GeM) is the biggest platform for the tendering process, a sole-proprietor entity is considered only in the certain low profile of contracts. A Sole Proprietor can also eligible to avail all such benefits as provided by Government to MSME (Micro Small and Medium Enterprises).
A Sole Prorietorship trader always has option to expand its business by converting its existing trade or business to registered company or limited liability partnership or any other form of business. Considering the initial stage of business it is advisable to start with sole proprietorship form of business depending upon the nature of business of concerned.
Apart from above, even after obtaining registration under various laws, we at ReturnFilings.Com also fulfill various compliance on your behalf in order to ensure proper and smooth functioning of business and to avoid unnecessary interest or penalty for non-compliance. We at ReturnFilings.Com are determinate to provide end to end solution; our motto is you concentrate on your business while we at ReturnFilings.Com will take care of all your compliance need.