Documents Required
- Aadhar Card
- PAN Card
- Bank Account
Streamlined Registration Procedure and Reduced Compliance Burden
You’ll only need to register with government agencies such as Income Tax & GST, which significantly reduces the compliance load and is cost-effective. In contrast, entities like LLPs or Companies need registration with the Ministry of Corporate Affairs and are obligated to submit multiple statutory returns annually, along with undergoing auditing by a Chartered Accountant each year.
Sole Ownership
In a Sole Proprietorship, there’s no need for partners, shareholders, or directors, allowing the proprietor to efficiently run the business with minimal documentation and sole ownership. With this setup, you retain full control over assets, revenue, expenses, and all facets of business operations.
Quick Decision-making
In a proprietorship, the business owner takes all business decisions. There is no consent or approval required from any other person.
Capital/Funding
Since Sole proprietorship solely relies on a single person’s earning, savings, borrowings and credit worthiness, it is very tough to raise the capital or fund in the proprietorship as there is no one else involved to raise the fund which also effects the capacity to raise funds from banks.
Unlimited/Personal Liability
An individual is the same as the proprietorship and there for the liability of the proprietorship is the liability of the individual and the individual is unable to repay the liability- the personal assets of the individual may get attached or encumbered or sold in order to recover that liability.
Business Continuity
In the event the individual dies, the proprietorship will be automatically dissolved as the individual and the proprietorship is the same entity. Hence, there will be no business continuity.
Less Credibility
Sole proprietorships is considered an unincorporated businesses. Therefore, it carry a less credibility when it comes to other types of business structure. In proprietorship, there is no centralized database available, such as MCA portal, to see it is active or inactive.
First step
Applying for PAN card, Aadhar card
Second step
The next step shall be to keep a name for the sole proprietorship business
Third step
The third step shall be to open a bank account in the name of the business
Fourth step
The proprietor needs to obtain the Registration Certificate under the Shops and Establishment Act of the state in which the business is located.
Fifth step
Register for GST and Small and Medium Enterprise (SME) under MSME Act, though it is not mandatory, it is beneficial to be registered under the same.