This is one of the most commonly seen business type in India. It has a simple registration process. It can be formed by one person. The main benefit of the firm would be to get a Bank Account and commercial dealings on the name of the firm rather than the person. I do not involve much cost in its formation. The best advantage is that the person is having total control over all the affairs of the business.
The name of the business can be selected by the proprietor himself. There is no binding by any one else to not to name the business on his own name. The business can be registered with the Registrar of Firms. A trade mark can also be registered of such a business. The business can also be registered with Udyog Aadhar Or MSME (Micro Small and Medium Enterprises) after registering as Proprietorship.
This is a business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a separate legal entity from its owner. It simply refers to a person who owns the business and the proprietor is personally responsible for its debts.
The sole proprietorship firm requires only one person for its incorporation, whereas partnership firm requires 2 or more person for incorporation of partnership firm. The partnership firm is governed by partnership Act, but there is no formal law on sole proprietorship firm. Sole purpose of proprietorship firm is to open current bank account on the name of the proprietorship business. This enable a person to do business in India with least compliance and least costs.
As the name suggests, ‘sole’ means ‘only one’ and ‘proprietorship’ implies ‘ownership’. Hence, a sole proprietorship is a form of business organisation, wherein a single person owns, manages and controls, all the business activities and the individual who operates the business is called as a sole proprietor or, a sole trader.
It is a type of business unit, in which a single person owns the entire business, i.e. all the assets and property belongs to the proprietor. Accordingly, he bears all the risk associated with the enterprise. Whatever income generated from the sole proprietorship business, it belongs to the sole proprietor only. The capital required to start the business or to continue operations, is arranged and brought to the business by the sole proprietor only.
In the event of loss, the personal assets of the proprietor along with the business assets can be utilized to discharge the dues of business. There is no legal distinction between the proprietor and business; they are one and the same thing in the eyes of the law. Sole proprietor uses his own skills, intelligence and expertise to operate the business.
A sole proprietorship is among the oldest and simplest business forms wherein, only one man heads the entire show. Some common examples of sole proprietorship business are grocery shop, chemist shops, beauty parlours, fabrication units and so on. In spite of various shortcomings, many businesspersons choose sole proprietorship business, especially startup founders, due to its inherent benefits. Such business is appropriate where the market for the product is limited or when the customers demand personalized services. It also suits to the businesses where manual skills are required or where the capital required to start the business is relatively small and does not involve a high degree of risk.
Documents for Registration
Following documents are required to start and register such a business
- Choose a business name.
- Select a location as the place of doing business.
- Pan card and ID for Address proof of proprietor.
- Business address proof
- Name of firm
- Electricity bill and Registered office Lease agreement
- Passport size photo Self attested.
- Mobile no
- Email id.
- Cancelled Cheque or Bank Statement
Cost of Registration: Rs.2940/-
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