Sole Proprietorship is the unincorporated business with a single owner who pays income tax on the profit earned on Business. It is the simplest form of business to set up or take apart, among individual self-contractors, consultants or small business owners. Sole Proprietorship is a type of business that legally has no separate existence from its owner. It is not a legal entity. It can be involved in commingle personal and business property and funds, something that partnerships, LLCs and corporations cannot do.
Sole Proprietorship simply refers to a person who owns the business and is personally responsible for its debts. This is a popular business form due to its simplicity, ease of setup, and nominal cost. It has no separate identity under the law. Owner will typically have customers write checks in the owner's name, even if the business uses a fictitious name. The taxation system in Sole Proprietorship is quite simple.
Benefits of Sole Proprietorship
- Easier to start with minimal formalities but it is relatively harder to open a bank account or obtain a payment gateway in the name of the business
- Sole Proprietorship is cheaper than other types of Business firm.
- Any name can be chosen in proprietorship as far as it does not infringe on a registered trademark. The name can be used unless the trademark regi stration has been obtained.
- Sole Proprietorship is the only business type that can be owned, registered and operated by one person.
- No tax on income less than Rs. 2.5 lakh per annum.
- No formalities in winding or closing a proprietorship. Tax registrations obtained in the name of the proprietor must be cancelled.
Norms for opening bank account in Sole Proprietorship
- Certificate or License issued by the Municipal authorities under Establishment act.
- Sales returns and Income tax returns
- Certificate of CST/VAT
- Registration document or Certificate issued by Sales Tax, Service Tax or Professional Tax Authority.
- License issued by Registration authority like Certificate of practice issued by Institute of Chartered Accountant of India, Institute of Cost Accountant of India, Institute of Company Secretary of India.
- In some cases, banks accept Import Export Code in the name of the concerned proprietor by the Central government or the State Government Authority.
- The Complete Income tax return in the name of the Sole proprietor.
- Utility Bills such as telephone bill, electricity bills in the name of the proprietor.
Proprietor PAN Card-Proprietorship business is considered similar to the Proprietor.PAN Card is used for Opening Bank Account, Obtaining License, Registrations, Certificate involved in Sole proprietorship and filing of Income Tax Return.
For more information about Sole Proprietorship Registration visit Registrationwala