What is a Sole Proprietorship and Documents required to Setup a Sole Proprietorship

A sole proprietorship business is one in which a single person manages, and controls the company. Small enterprises working in the unorganized sectors in India use it as one of the most popular kinds of business. Proprietorship firms are simple to create and have low regulatory compliance requirements. There is no formal or comprehensive procedure for registering a sole proprietorship because there is no difference in the identification of the owner and the sole proprietorship. In this blog information on what is Sole Proprietorship, Documents required to setup a Sole proprietorship, and Advantages of Sole proprietorship is included.

What is a Sole Proprietorship?

A sole proprietorship firm is a business entity that is owned, controlled and managed by a single person. The owner of the business is called the sole proprietor of the Firm. As the business is run by a natural person, there is no legal difference between the promoter and the business. The promoter himself receives all the profits.

Advantages of Sole Proprietorship

• Other than a sole proprietorship and a one-person corporation, no other business allows the owner to be the sole beneficiary of profits. A minimum of two people are required in all other types of entities, such as a partnership, LLP, or corporation.
• It is easier to run when only one person is in charge because that person will be the sole decision maker and will not have to evaluate a variety of viewpoints. In a proprietorship firm, there is no such thing as a board meeting or consent from other people.
• A sole proprietorship business has no formal registration procedures, and the business uses the proprietor’s legal identity. As a result, a proprietorship can be established without the need for registration. Udyog Aadhaar registration and trademark registration may be obtained using the promoter’s PAN and Aadhaar number to develop and protect the business’s identity.

Documents Required to setup a Sole Proprietorship in India

• Photograph
• PAN Card
• Aadhar Card
• Electricity Bill or any other utility bill for the address proof

Registration requirements for Sole Proprietorship

• Shop and Establishment Act
• Registering as SME
• GST Registration

Conclusion

The government of India has not prescribed any registration mechanism for registering a proprietorship firm. Thus, the registration of a proprietorship can only be recognized through tax registrations by the business as per the rules and regulations. Sole Proprietorship is one of the simple and easier process to setup a business in India.