What is a Sole Proprietorship?
Sole Proprietorship is a business enterprise that is owned and controlled by one person who possesses the entire authority & responsibility with respect to the business. This form of business is ideally suited to businesses where the nature of the business is simple, financial risk is minimal, there is no need to take huge debts and the product’s market is small.
Forming a Sole Proprietorship
You do not have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically comes from your business activities. In fact, you may already own one without knowing it. If you are a freelance writer, for example, you are a sole proprietor.
But like all businesses, you need to obtain the necessary licenses and permits. Regulations vary by industry, state and locality. Use the Licensing & Permits tool to find a listing of federal, state and local permits, licenses and registrations you'll need to run a business.
No Separate Legal Entity, Simple, Carried on by person/s, No distinct between owner and business, Owners keep all profits, Complete control over decision making
Business Name, Business Location, DBA Certificate ( If so required )
|Advantages of a Sole Proprietorship||DisAdvantages of a Sole Proprietorship|
|Cost effective||No perpetual succession|
|Control over financials of the company||Raising capital|
|Having control of your business Privacy||Difficult to hire and retain employees,|
|Minimal reporting requirements||Competition|
|Simplified tax reporting,||Limited Resources|
|Quick Decision||Lack of Technological advancement|
|Flexibility in operation||Not Suitable for Large Scale Operations|
Documents Required for Sole Proprietorship Registration in India
The Sole Proprietor can use other registrations like
MSME registration or ESI (Employee State Insurance) registration
GST Registration or professional to establish the existence of the business.
Yes, If you choose to operate under a name different than your own, you will most likely have to file a fictitious name (also known as an assumed name, trade name, or DBA name, short for "doing business as"). You must choose an original name; it cannot already be claimed by another business
There is no government registration needed in order to start a sole proprietorship business in India. You don’t have to go to an online registration portal and fill up a form or submit any documents. However, you do need to open a current account with a bank in the name of the business.