It is the oldest and the simplest form of business entity. This type of business entity is mainly suitable for small-scale business operators. Sole Proprietorship Company is owned and managed by the individual making him the sole authority to take all kind of decisions regarding the operations of the organization. Further, the taxation and accounting procedure in this form of company is much easier than other forms of companies. As a sole proprietor is not required to file a separate business tax return and all income generated from the business is reported on the personal tax form.
Most businesses in India start individually without other’s participation. An individual carrying out business activities is the sole proprietor and its business entity is said to be a Proprietorship Firm. The identity of an individual and the business are not different from each other. But due to the lower tax rate, flexibility and multiple advantages people prefer this structure for the early stage of business.
With the inclusion of partners, the control over operation reduces. Hence, these proprietors choose to run the business single-handedly and land upon sole proprietorship firm registration. Although there is no specific Act to regulate this organization, there are many ways to register a Sole Proprietorship firm. Small businesses aiming to take lower risks prefer this structure.
Naming Criteria of a Sole proprietorship business
Since this kid of business structure is not much regulated by law, there are hardly any naming criteria’s. Just the name should not be illegal or offensive and it should not be misleading for the public.
Eligibility for registering a Sole proprietorship
Since this kind of business exists only in India, only a natural person who is a resident of India can be a promoter and the business should have a legal objective.
Minimum and maximum requirements of Sole proprietorship business
Only 1 individual holds the entire authority.
Following documents of the Proprietor is required: