‘Sole’ means single, and ‘Proprietor’ means the owner. Sole Proprietorship is one of the oldest and simplest forms of business organization owned, managed, and controlled by only one person. The person alone gets the finance available and becomes the sole beneficiary of the profits earned by the business; at the same time is responsible for bearing the losses of the business.
Sole Proprietorship is easy to form as well as easy to close as it requires very few legal formalities and regulations. A sole proprietorship does not need to be registered. However, in order to start a sole proprietorship, an entrepreneur requires certain industry-specific licenses. A few general factors are discussed below:
Must Read: All about forms of Business Organisations
Business Name
There is no obligation for a sole proprietor to select a trading name for their business. How so ever, if they wish to do so, they can.
A name represents your business in the world and beyond, and it provides information about your business to the customers, competitors, and employees. But only selecting a catchy name is not enough. Remember that it should not clash with any other business entity’s name. Once you are ready with a name, get the name registered. Select a DBA (Doing Business As) along with the business name. A DBA name is required when one person does business with another name and the company name is different. The next step after the name registration will be getting your logo trademark.
Shops and Establishment Act
One of the important regulations to which most businesses in India are subject to is the Shop and Establishment Act, enacted by every state in India. The Act is designed to regulate the payment of wages, hours of work, leave, holidays, terms of service, and other work conditions of people employed in the shop and commercial establishments. One needs to consult the Shops and Establishments Act with the Administrative Office/Municipal Corporation in your city.
Registration under MSME Act, 2006 (Udyam Registration)
An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, namely:
- A micro-enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;
- A small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and
- A medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.
For the detailed legal framework for the classification of MSMEs and procedures for their Registration, download the PDF and read it carefully and fill out the form on https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm.
GST Registration
According to the Goods and Service Tax Act, 2017, any business with a turnover of Rs.40 lakhs and above must register for GST. For North-eastern and Hill states, the turnover is Rs.10 Lakhs for GST Registration. When a person provides intra-state services with an annual turnover of Rs. 20lakhs and intra-state goods provider with an annual turnover of Rs.40 lakhs he/she needs to register for GST. Even intra-state suppliers must register for GST.
What are the main documents required for GST Registration?
The main documents required for GST Registration for individuals and sole proprietors are
- Owner’s PAN Card – To Apply for PAN Online, CLICK HERE
- Owner’s Aadhaar Card
- Address Proof
- Bank Account Details
- Photographs
For more details and information on GST and GST Registration, CLICK HERE.
