Sole Proprietorship

Factors to register for a Sole Proprietorship

The process to open a bank account for a Sole Proprietorship starts from various types of registration like GST Registration, MSME Registration, TAN Registration, Shop & Establishment Act Registration, Professional License, Chartered Accountant Certificate or Others. The Proprietorship firm and the Proprietor are similar.
The PAN Number of the Proprietor will be the PAN number of the Proprietorship business which states that there will be no separate legal identity for business. The assets and liabilities of the Sole Proprietorship business and the Proprietor will be the same. Certificate of Registration will not be held by the proprietor. The Proprietorship firm is formed by registering with the relevant Government officials and there is no registry or regulation for registering the name of a Proprietorship. Since there are no rules of registry for registering the name of a Proprietorship, the sole method is to ensure exclusive use of the business name is to obtain Trademark Registration in the name of the business. A business operated by a Proprietorship firm cannot be transferred to another person, unlike an LLP or a Private Limited Company. Only the assets in the Proprietorship can be transferred to another person through the process of the sale. The important assets like Government Approvals, Registrations, etc cannot be transferred to another person. Proprietorship firms are a Business Entity that is owned, managed and controlled by a single person. Hence, Proprietorship firms cannot issue shares and cannot have investors. The Proprietorship holder will have to file their Annual Tax Return with the Income Tax Department of India. Other Tax Filings like GST Filing is required, based on the business activity performed. However, Annual Reports or accounts is not needed to be filed with the Ministry of Corporate Affairs, which generally is required for Limited Liability Partnerships and Companies. A Tax Audit may be necessary based on total turnover and other factors.

What is a Sole Proprietorship?

A Sole Proprietorship is a type of unregistered business entity that is owned, managed and controlled by a single person. The Sole Proprietorship is used by most micro and small businesses operating in the unorganized sectors. Proprietorships are easy, to begin with, and have very minimal regulatory compliance requirements for operation. Once the startup phase is over, the Proprietorship does not offer the promoter to take advantage of the benefits in Limited Liability Proprietorship, Corporate Status, Separate Legal Entity, Independent Existence, Transferability, Perpetual Existence which is essential for any Business. Therefore, Proprietorship Registration is required only for unorganized, Small Businesses that will remain small and have no desire to expand or have a limited period of existence. The existence of a Proprietorship must be built through Tax Registrations and other Business Registrations that a business is required to have as per the desired. All the Registrations for a Proprietorship would be in the name of the Proprietor, making the Proprietor personally liable for all the liabilities of the Sole Proprietorship.

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