How to Register a Sole Proprietorship As a Start-up in India
How to Register a Sole Proprietorship As a Start-up in India
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The business structure you choose determines your responsibilities, liabilities, and taxes. It also impacts your business expansion options. For example, some structures are more investor-friendly than others. Also, some structures have different rules on ownership and transferability. To choose the right one for your business, consider your growth plans, risk tolerance, and regulatory compliance requirements.
Sole proprietorship is a type of business in which a single person owns and runs the business. It is the most popular form of business in India, and it has many benefits. For example, it is simple to set up and requires fewer regulations than other business forms. Additionally, it has a low capital requirement and is easy to manage.
Moreover, the profits earned by the sole proprietorship are taxed at the individual income tax rate. In addition, the business may be operated from home, which can reduce the cost of office space. The main disadvantage of a sole proprietorship is that the owner's personal assets are at risk if the business fails.
To begin a sole proprietorship in Chennai, you need a few documents. These include the following:
A valid PAN card of the owner of the business. Proof of address of the business (electricity bill, gas connection, rent agreement, etc). An NIC code for your industry. Proof of ownership (sale deed in case of property registration, lease agreement in case of shop & establishment act registration, and a letter of authorization from the owner in case of a residential address).
Minimum Legal Compliances – Sole Proprietorships are not governed under any specific law and thus their compliances are automatically minimal by virtue of their nature. They need to comply with licenses or registrations that are specific to their nature of business. They do not need to submit their Annual Reports to the Ministry of Corporate Affairs like other companies do.
Less Investment – Compared to other forms of businesses, a sole proprietorship requires less capital at its initial phase. This makes it suitable for first-time entrepreneurs who would want to get a taste of the business world.
No Sharing of Earned Profits – As the sole proprietor is the only person who operates and manages the business, all the earnings are his/hers. There is no obligation to share the profits with anyone else.
Sole Proprietorship can be converted into a limited company in future, if the business owner wants to expand his/her operations. However, the process of conversion involves adherence to certain compliances that need to be met in order to complete the procedure. It is recommended to consult an expert for assistance in this case. The process usually takes about 15 days to complete. The experts at FilingPoint can guide you through the entire process, including documentation and filings. They can also help you with the opening of a bank account in your name. To MCA register a sole proprietorship as a startup, the applicant must provide an Aadhar card, PAN number, address proof, and a valid business address.
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