- 2 proofs to open a bank account
- The time it takes to register as a proprietor
- Documents required for sole proprietorship firm registration
- The firm registration process as a sole proprietorship
- Benefits of the sole proprietorship firm registration
- Drawbacks of the sole proprietorship
- Some FAQs on sole proprietorship firm registration
The sole proprietorship firm registration is one of the easiest ways of doing business in India. It requires less capital, fewer formalities and less effort overall. No wonder so many people want to register themselves as a sole proprietor. The compliances are minimal and easy to fill in such a case.
It is a single person firm registration that has only one main objective i.e. Opening a current bank account in the name of the business. In the sole proprietorship firm registration, it requires a minimum of 2 legal entity proof to open a bank account.
2 proofs to open a bank account
1st option: MSME registration certificate + Chartered Accountant Business certification
This case is applicable only
- When the business deals in a single state only
- When the turnover or sales is under Rs. 20 Lakh per annum within the state
2nd option: GST registration certificate
It is required when the company
- Deals in inter-state business transactions
- Operates using e-commerce. Read on how to start e-commerce in India
- Is a trader/manufacturer/aggregator/retailer
- Within the state turnover exceeds Rs. 20 Lakh
The time it takes to register as a proprietor
- In the case of option 1, it takes 2-6 working days
- In the case of option 2, it takes around 7 working days
Documents required for sole proprietorship firm registration
The documents required are as follows
- Aadhar card
- Pan card
- Bank account. Read on how to open a Bank account
- Proof of office registration
- Address proof of sole proprietorship business
- Certificate attested by a CA
For more information read Documents required for Sole proprietorship registration
Apart from this, the sole proprietorship owners usually get the following registration as well
- Registering the firm under MSME
- Acquiring Shops and Establishment Act license. Avail our service to register under Shops and Establishment Act
- Registration under GST. Avail our expert services to Register under GST
The firm registration process as a sole proprietorship
There is no need for registration under sole proprietorship firm registration but there is a need to open a bank account in the name of the business for which the documents required are mentioned above.
Register your sole proprietorship now
Benefits of the sole proprietorship firm registration
Some major factors why people consider this type of business involves
- This type of business is easy to start. Since there is no firm registration and only needs a proprietor to open a bank account in the name of the company.
- The name of the business is easy to choose and since there is no firm registration process, the same name can be chosen. But, once the trademark registration is done, the registration process is a must.
- If the income per annum for a sole proprietorship is below Rs. 2 lakh per annum, then the business needn’t pay any tax but once the income exceeds Rs.10 lakh, then there are not many benefits to the sole proprietorship
- Complete control in the functioning of the business is one of the biggest advantages in the firm registered as a sole proprietorship.
- This type of business incurs less cost as there is a very low investment in the formation and compliance.
Drawbacks of the sole proprietorship
Some of the drawbacks in such a scenario are as follows
- In such a case, there is always a lack of resources, be it financial resources, technological resources or any other.
- Even if a person wants to add some financial resources from the public, there is no such option available.
- There is no option to add any partner in the business.
- And because there is no partner added to the business, the liability of sole proprietor is unlimited.
Some FAQs on sole proprietorship firm registration
- Q- Is there a need for a separate commercial place to conduct business?
- A- No, there is no compulsion for the same. A person can conduct business in the personal property or rented property to conduct the business.
- Q- Is NOC required to conduct business?
- A- In the case of rented or a leased out property, there is a need for No Objection Certificate to conduct such business.
- Q- Can I name this business whatever I want?
- A- Yes you can name this business whatever you want, as long as there is no extension made in the name of the business. Eg- LegalRaasta services.
- Q- Are there any other way of registering this business apart from the other two ways mentioned above?
- A- Yes there are, but these ways are costly and less valid. These are under shop act license and Income tax return (Business ITR)
- Q- Can an NRI start a business under sole proprietorship?
- A- No, this option of starting a business is limited to Indians only but the NRIs could invest in any business.
- Q- How much capital is required to start a business under sole proprietorship?
- A- Just like the case of a private organization, there is no rule regarding this requirement of capital to operate a business as a sole proprietor.
- Q- Is there an option to convert a sole proprietorship to other forms of business?
- A- Of course there is a proper procedure to convert the sole proprietorship businesses to other forms of business.
- Q- What is the way to reduce the cost of registration under sole proprietorship?
- A- If you register your firm under the GST certificate or MSME certificate, then the cost is reduced significantly than when you register under Shop act and ITR act.
Whether you want to register your firm under IEC registration, ISO registration, digital signature or ESI registration, do click on any tabs given. Or give us a call on +91 850008585 or email us at firstname.lastname@example.org. You can also visit our website LegalRaasta.