What is Sole Proprietorship Firm Registration?
Sole Proprietorship Firm Registration in chennai
A sole proprietorship is the most common and traditional type of business in India and around the world. If you ask me why it is common, the answer is that it is very easy to form.
This is simply because there are no complicated government regulations to register a sole proprietorship as compared to other business entities such as limited companies or partnership Firms. A sole proprietorship is formed and owned by a single owner.
Only one person controls and owns the entire business. Both the proprietor and the sole proprietorship firms are considered to be single entities.
What are the Benefits that are applicable to a Sole Proprietorship Firm:
Decision-making:
Decision-making is the prime benefit of a sole proprietorship. The business owner is the sole controller of the business and there is no need for obtaining any approval from any Board of Directors or other partners.
Easy to form:
Since the formation of a sole proprietorship is not legally complicated, it is easy to set up. In addition, no significant capital is required to form a Proprietorship business.
No restriction on Capital:
There is no minimum or maximum authorised Share Capital requirement to form a Proprietorship Firm. The law does not insist on capital for the formation of a proprietorship firm.
Tax benefits:
There is a good advantage for a Proprietorship firm on taxation. Unlike Private Limited or Partnership, it’s not a flat 30% income tax to be paid. The taxation slab is mentioned below for your reference.
Legislative meetings:
In a sole proprietorship, there is no need to conduct any regular legislative meetings and to file any documents.
What are the requirements to incorporate a Sole Proprietorship Firm?
1
One person as a proprietor
2
No minimum paid-up capital needed
3
Office space in India
What are the Documents required to incorporate a Sole Proprietorship Firm?
1
PAN Card
2
Aadhar Card
3
Passport size Photo
4
Rental deed
5
EB Card
6
Canceled Cheque
How to register a Sole Proprietorship Company
SOLE PROPRIETORSHIP COMPANY
How to register a Sole Proprietorship Company?
The government does not offer formal registration for sole proprietorship firm because that is not registered under the Indian Companies Act.
Although it is wise to register a company with MSME as it serves as legal proof of the company and grants many privileges.
WHAT IS MSME REGISTRATION?
Micro Small Medium Entrepreneurs are also called as Udyog Aadhar registration. As small-scale industries are the backbone of the Country, the government is providing various schemes to small and medium-scale industries through MSME. The MSME registration is issued by the State Government and now from 2015, it is changed to Udyog Aadhar.
MICRO INDUSTRIES:
The entity which does not exceed rupees 25 Lakhs of Capital is called Micro Industry.
SMALL SCALE INDUSTRY:
The entity which does not exceed rupees 5 Crores is called Small Scale Industry.
MEDIUM SCALE INDUSTRY:
The entity which does not exceed rupees 10 Crores of capital is called Medium Scale Industry.
TYPES
What are the main characteristics of a Sole Proprietorship Firm:
01
SINGLE OWNERSHIP:
Only one person is allowed to incorporate a Sole Proprietorship. No directors or shareholders are allowed to appoint or invest.
02
RESPONSIBILITIES:
The proprietor of the firm is solely responsible for both profits and losses.
03
TRANSPARENCY:
A Sole Proprietorship is a privately owned company so, it never shares its company details publicly.
04
EXISTENCE:
This kind of firm is not recognized to be a separate legal entity, therefore, the proprietor and the firm are considered to be a single person so that when the proprietor dies, the company ends.
05
WIND UP:
It is easy to incorporate and as well as easy to wind up. If the proprietor wishes to wrap up the firm for any reason, he/she can do so at any time.
Other mandatory licenses
Are there any mandatory licenses to run a business? Yes, each business requires a specific license, depending on its objectives. Some of the mandatory licenses are,
GST
If you are providing goods/services within India, GST registration is mandatory. The basic exemption limit is Rs.20 Lakh. It takes at least 3 to 4 days to obtain a GST certificate.
Trade License
It is a license or certificate issued by a municipal corporation under the state government to ensure that your goods and services are harmless. Obtaining a trade license is must for trading goods and is a legal way to do business smoothly.
IE Code
The IE code is essential if the proprietor intends to export goods. Without IE code, no one can export goods to other countries. The Importer-Exporter Code is the full form of the IE code and is issued by the Director General of Foreign Trade (DGFT).
Drug and Cosmetic License
If the business objective is related to the intake medicines or external cosmetics, the operator needs to obtain a Drug and Cosmetic License, which is regulated by the Drug and Cosmetic Act of 1940 and issued by the State Drug Standards Control Organization (SDSCO) or the Central Drug Standards Control Organization (CDSCO).