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Sole Proprietorship Registration in India

Hemapriya kanakkupillai
Sole Proprietorship Registration in India

A sole proprietorship registration online is considered one of the easiest types of businesses to start. Unlike corporations or LLC’s, you don’t have to register with the state. However, you must acquire appropriate permits and licenses to operate legally, and you are personally liable for debts, lawsuits, or taxes your company accrues.

Types of Sole Proprietorship

A sole proprietor may operate as an independent contractor (a freelancer), a business owner, or a franchisee.

  • Independent Contractor: An independent contractor is a self-employed sole proprietor who takes on projects on a contract basis with clients. They have the freedom to choose which clients they take on, but they are often
  • subject to the processes and methods that the client requires.
  • Business Owner: Business owners can also be self-employed sole proprietors, but unlike the contractor, there is much more autonomy in how the work is completed for clients, and the operation itself may even be more complex with employees and/or intellectual property.
  • Franchisee: Franchise owners may also be sole proprietors. The franchisee benefits from the guidance, brand, business model, etc. in exchange for royalties paid to the franchisor.

Basic features of Sole Proprietorship

  1. The owner is completely responsible for all the debts and liabilities. This type of business is completely owned and run by one single person.
  2. In such a business, there is no legal difference between the owner and the business entity.
  3. The owner is in direct control of all the elements and is legally accountable for the finances of such business which may include debts, loans, loss, etc.
  4. A sole trader does not necessarily work all alone; it is possible for such a person to employ other people also.
  5. The sole proprietorship is the simplest business form through which a person can start its business.
  6. The sole proprietorship is not a legal entity.
  7. It simply refers to a person who owns a business and is personally responsible for all its working.

Registration Procedure for Sole Proprietorship:

  1. The first and primary step for sole proprietorship registration is to apply and get the PAN. However, if the owner has one then it is not required.
  2. The very next step is to give the name to the business or the firm.
  3. Then there is no formal requirement for the registration procedure for such firms but need to have a bank account in the name of the firm.
  4. After the opening of bank account you can register your firm under the Small and Medium Enterprise Act, however, it is not compulsory but advisable to do so.
  5. Then the last step is that if your turn over is more than 20 Lakhs, you need to register GST for business. You can also get a shop and establishment Registration done if you want to get it done so.

Hemapriya kanakkupillai
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