A sole proprietorship is a very popular type of business entity that is owned and managed by a single entrepreneur particularly in the unorganized sector, mainly small traders and merchants. Proprietorships are recognized by registrations such as service tax registration or sales tax registration. It is very easy to start a proprietorship firm as it has very minimal regulatory compliance formalities for commencing and operating a business.
However, proprietorship firms do not offer benefits such as limited liability proprietorship, separate legal entity, corporate legal status, easy transferability, perpetual succession. Therefore, proprietorship firm registration is best suited only for micro and small businesses that may not have a continuous existence.
Since, the existence of a proprietorship firm must be established through tax other business registrations as per the rules and regulations. Registration is thus, obtained in the name of the Proprietor to establish that the concerned Proprietor is managing and operating the business as a sole proprietor. Hence, all the registrations would be in the name of the Proprietor, making him personally liable for all the liabilities of the firm.
REASONS TO OPT FOR A PROPRIETORSHIP FIRM
- Address proof and identity proof (PAN card).
- KYC documents.
- Rental agreement or sale deed.
IMPORTANT FACTORS TO BE CONSIDERED IN A PARTNERSHIP DEED
- Prepare documents required for the Proprietorship Registration.
- Apply for the Service Tax or VAT or GST registration.
- Get Service tax or VAT or GST Registration Certificate.
- Apply for a current bank account in any bank with complete documentation.
- After getting the respective licenses or certificates as per the proprietorship business, one can commence the business.