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Sole Proprietorship

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Overview of Sole Proprietorship

A sole proprietorship is an unregistered business entity owned by one individual. It is ideal for small and medium-sized enterprises (SMEs) and is characterized by:

  • Minimal compliance requirements.
  • Complete control by the proprietor.
  • Simplified tax structure.

Benefits of a Sole Proprietorship

Benefits:

  • Easy to Set Up: Minimal legal formalities are required for setting up a proprietorship.
  • Low Costs: Fewer registration fees and compliance costs make it an affordable business structure.
  • Complete Control: The proprietor has full decision-making power and control over the business.
  • Tax Benefits: Income is taxed as individual income, avoiding corporate taxes.
  • Flexibility: No rigid compliance rules like in other business structures, offering greater flexibility.

Pre and Post Registration Checklist for Sole Proprietorship

Pre-Registration Checklist:

  • Choose a business name.
  • Open a bank account in the proprietor’s name.
  • Obtain necessary registrations (e.g., GST, MSME).

Pre-Registration Checklist:

  • Choose a business name.
  • Open a bank account in the proprietor’s name.
  • Obtain necessary registrations (e.g., GST, MSME).

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Documents Required for Sole Proprietorship Registration

Sole Proprietorship Registration:

  • PAN Card of the proprietor.
  • Aadhaar Card or any government ID.
  • Proof of business address (utility bill or rent agreement).
  • Bank statement or canceled cheque.
  • GST registration certificate (if applicable).

Comparison Sole Proprietorship vs Pvt Ltd, LLP, and OPC

Sole ProprietorshipPrivate Limited CompanyLimited Liability Partnership (LLP)One Person Company (OPC)
OwnershipSingle ownerMultiple ownersPartners
Registration RequirementOptionalMandatoryMandatory
Legal EntityNot separateSeparate entitySeparate entity
Compliance BurdenLowHighModerate
TaxationIndividual tax rateCorporate tax rateCorporate tax rate
Limited LiabilityNoYesYes
Ease of ClosureEasyComplexModerate

How to Incorporate a Sole Proprietorship with ONE CALL TAX

A sole proprietorship is the simplest and most common form of business structure in India. It is owned and managed by a single individual who takes full control and responsibility for the business. If you’re looking to set up your sole proprietorship with ease, ONE CALL TAX is here to guide you through every step of the process.

Step-by-Step Process to Register a Sole Proprietorship

  1. 1Choose a Business Name
    • Ensure the business name aligns with your services and complies with naming regulations.
  2. 2Open a Current Bank Account
    • Open a business bank account using the chosen business name for smooth financial transactions.
  3. 3Apply for GST Registration
    • GST registration is mandatory if your turnover exceeds the prescribed threshold limit.
  4. 4MSME Registration
    • Register your business under the MSME Act if you fall under the category of small and medium enterprises.
  5. 5Shop and Establishment Act License
    • Depending on your state’s requirements, this license may be mandatory for businesses operating from a commercial premises.
  6. 6Professional Tax Registration
    • Professional tax registration is applicable in certain states for businesses with employees.

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Post Incorporation Steps and Annual Filings for Sole Proprietorship

After the incorporation of the Sole Proprietorship, it must comply with annual filings, including:

  • File Income Tax Returns annually.
  • Pay advance tax if applicable.
  • File GST returns monthly or quarterly.
  • Maintain books of accounts.
  • Renew applicable licenses.
  • Conduct audits if turnover exceeds ₹50 lakh.
  • Starting your sole proprietorship is a seamless process with ONE CALL TAX. From registration to compliance, we ensure your business operates smoothly. Contact us today and get started on your entrepreneurial journey!

Taxation Rules for OPC and Advance Tax Applicability

  • Sole proprietors are taxed under the individual tax slab rates.
  • Advance tax payment is mandatory if tax liability exceeds ₹10,000.
  • Deductions under Section 80C, 80D, and other sections apply.

Other Registrations Required for OPC

  • GST Registration (if turnover exceeds threshold limits).
  • Trademark Registration for brand protection.
  • Import-Export Code (IE Code) for export/import businesses.
  • MSME Registration for benefits under government schemes.
  • Accounting and Payroll setup.
  • Professional Tax Registration (state-specific).

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