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Sole Proprietorship
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What is Sole Proprietorship ?

A Sole Proprietorship is the simplest form business structure, owned and managed by a single individual. this model, there is no legal distinction between the owner and the business, making the proprietor personally liable for, losses, debts, and legal obligations.

 

This structure ideal for freelancers, consultants, small traders, and local businesses, offering a straightforward setup with minimal compliance requirements. As a result, it's one of the quickest and easiest ways to start a business in India.

Why Do You Need a Sole Proprietorship ?

  • Easy Setup- No lengthy registration process involved. 

  • Low Cost- No incorporation fees; minimal documentation. 

  • Full Control- The proprietor controls decision-making and management. 

  • Fewer Compliances- No annual filings or board meetings. 

  • Ideal for Testing Ideas- Great for starting small and scaling later. 

  • Tax Simplicity- Income is taxed as personal income, with no corporate tax structure. 

  • Fast Bank Account Opening- With basic business proof, accounts are easily opened. 

How Bhadauria Group Can Help ?

  • ​Identifies Structure: Assists in identifying the suitable structure based on business needs.​

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  • Draft Documents: Prepares all necessary documents, such as the MOA, AOA, business declarations, and other related documents.

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  • Handles DSC/DIN Applications: Manages the preparation and submission of DSC and DIN applications.

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  • Guide on Registrations: Guides on applicable registrations like GST, UDYAM, Shop & Establishment, etc. 

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  • Bank Account Support: Supports in preparing documents for bank account opening 

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  • Checks & Coordination: Handles documentation checks and coordination with authorities 

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  • Provides Legal Support: Provides legal support during follow-ups or clarifications from departments 

Eligibilities for Registering Sole Proprietorship in India

  • Proprietor must be an Indian citizen or NRI. 

  • It must be owned and managed by a single person. 

  • Must be at least 18 years old and legally competent to contract. 

  • Must have a valid PAN card. 

  • Must have a valid business address (can be residential or commercial)

  • Should not be bankrupt, disqualified, or barred from doing business. 

  • Must comply with local and state laws (like the Shop and Establishment Act). 

Documents Required to Register a Proprietorship Firm 

To register and legally operate a sole proprietorship in India, you will need the following key documents :

 

  • Identity Proof : Aadhar Card , PAN Card, Passport, Voter ID, or Driving License of the proprietor.

  • Office Address Proof: Utility bills, registered rental/lease agreement, or property documents of the business location.

  • PAN Card: PAN card of the proprietor is mandatory for both registration and tax filing.  

  • Passport-size Photograph 

Benefits of Sole Proprietorship 

  1. Simple and Easy to Start- A sole proprietorship is one of the easiest business structures to set up, requiring minimal paperwork and legal formalities. 

  2. Complete Control and Flexibility- The proprietor has full authority over all business decisions, operations, and strategies without needing approval from anyone else. 

  3. No External Interference- As the sole owner, there are no partners, directors, or shareholders involved, allowing for independent and quick decision-making. 

  4. Minimal Legal Compliance- This structure involves fewer legal obligations and ongoing compliance compared to other types of businesses. 

  5. Sole Ownership of Profits- All the profits earned from the business belong entirely to the proprietor, with no requirement to share earnings. 

  6. Easy to Close or Exit- Winding up the business is simple, with fewer formalities and lower costs than registered or incorporated entities.

Limitations of Sole Proprietorship 

  1. Unlimited Personal Liability- The proprietor is personally responsible for all debts and liabilities of the business, which may put personal assets at risk. 

  2. No Separate Legal Identity- The business and the owner are considered the same legal entity, which can limit legal protection and credibility. 

  3. Limited Access to Capital- Sole proprietors often face difficulty in raising funds, as they cannot issue shares or bring in investors easily. 

  4. Difficult to Attract Investors- Due to the unregistered nature and lack of formal structure, investors are generally hesitant to invest in sole proprietorships. 

  5. Lack of Business Continuity- The business does not have perpetual existence and may cease to operate upon the death or incapacity of the owner. 

  6. Limited Scalability- Growth opportunities may be restricted due to limited resources, manpower, and financial support. 

Licenses and Registration Required for Proprietorship

  • Business license: Registration under the Shop and Establishment Act may be required by local authorities. 

  • GST Registration Required If:  

    • Goods: Turnover > ₹40 lakhs   

    • Services: Turnover > ₹20 lakhs  

    • E-commerce: Mandatory, regardless of turnover 

  • Bank Account: Documents mentioned above are needed for opening a current account for your business.

  • Other Licenses (if applicable): For specialized activities, additional registrations/certificates such as Import-Export Code, Food License (FSSAI), Professional Tax Certificate, or Udyam Registration may be required by banks or authorities. 

Process of Registering Sole Proprietorship

A sole proprietorship itself does not require a formal registration certificate to become a separate legal entity. Instead, the business is established through key registrations and licenses. Here is a step-by-step process: 

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  1. Choose Business Name: Select a unique name for your business. 

  2. Gather Documents: Collect identity, address proofs, business address documents, and photographs. 

  3. Udyam Registration: Register for MSME to avail government benefits and schemes (optional but highly recommended). 

  4. Open Bank Account: Open a current account in the business name. 

  5. Obtain Tax Registrations: Register for taxes your business needs, like Professional Tax or Income Tax. 

  6. GST Registration: Apply for GST if required or if your turnover exceeds the threshold. 

  7. Shop and Establishment License: Apply at local municipal corporation with necessary documents and fees to legally run your business. 

  8. Other Licenses: Get any additional licenses needed for your business type.

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With Bhadauria Group, get the process done fast - usually within 1-2 days, depending on how quickly your documents are ready and approvals from local authorities.

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