Note on Sole Proprietorship, Legal registeration of sole proprietorship

Note on Sole Proprietorship, Legal registeration of sole proprietorship

About Sole Proprietorship:

A business that is owned and managed by a single person. There is no such thing as registration of proprietorship firm with any statutory Law like Company Law / LLP Law / Partnership Act etc.;

Proprietorships are recognized by other registrations, such as a Service Tax registration or GST or MSME or Shop and Establishment Act registration.

Features of Sole Proprietorship

• Unlimited Liability: A sole proprietorship has no separate existence. Therefore, all debts can only be recovered from the sole proprietor.

• Small Business: The owner has unlimited liability with regard to all the debts. This should heavily discourage any risk-taking, which means that it’s suited to only small businesses.

• If you plan on running a business that requires a loan or may end up paying penalties, fines or compensation, it’s best you look into registering an OPC

• Easy to Start: There is no separate registration procedure for proprietorships. All you need is a government registration relevant to your business.

• If you’re selling goods online, a proprietor would only need a tax registration (GST). Therefore, starting up as a sole proprietor is relatively easy.

• Sole proprietors will be taxed on their personal income tax rate.

Note on Sole Proprietorship, Legal registeration of sole proprietorship

Disadvantages of Sole Proprietorship

• Unlimited personal liability.
• Difficulty in raising investment capital.
• lack of financial control
• difficult to find outside investors to fund sole proprietorships

List of documents/information required to register :

1. Name of the Proprietor Firm
2. PAN Card
3. Aadhaar Card
4. Rental Agreement on Business name if available
5. Utility Bill – Electricity Bill copy of the address
6. Email id and phone number

Steps:

Step 1. Open a Current Account in Bank with your Proprietorship Firm name. (For Bank KYC Two proofs required from step 2)

Step 2.Legal Certificate: get register under any 2 of the below:

a) GST Registration certificate
b) MSME Certificate
c) Shop and Establishment Act
d) IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of bank account. Etc.

Income Tax Applicability on Sole Proprietorship

The income tax rate for sole proprietorship firm is the same as that of the income tax rate of individuals. In short, sole proprietor taxes are payable as of that of the individual.

• Due date of filing of an income tax return for sole proprietorship firm:

Particulars	Due date
Income tax return filing wherein the audit is not necessary	31st July
Income tax return filing wherein the audit is necessary	30th September

Kindly note that:

Proprietorship firms are not eligible for a start – up / DIPP Recognition as Proprietorship firm are not covered under any Act or Law. A sole proprietorship has no separate existence. Therefore, all debts can only be recovered from the sole proprietor. Therefore, the owner has unlimited liability with regard to all the debts.

For Regular Professional Updates Join : https://t.me/Studycafe

For Regular Student Updates (CA Final) Join : https://t.me/Studycafe_cafinal

For Regular Student Updates (CA IPCC) Join : https://t.me/Studycafe_Cainter

The post Note on Sole Proprietorship, Legal registeration of sole proprietorship appeared first on Studycafe.

from Studycafe https://ift.tt/2tnyIfX