Sole Proprietorship Firm is a Single Person Firm. A business name and a current account in any bank is the basic requirement to run business in India under Proprietorship.
Key Features of Proprietorship Firm
- 1 Person Required as Single Entrepreneur.
- Single Owner of the Business.
- Easy to Start and Easy to Close.
- Complete Control.
- Lower Cost of Formation and Compliance.
Disadvantages of Proprietorship Firm
- Lack of Resources.
- Unlimited Liability.
- Lack of Credibility.
- Can not raise funds easily.
- Can not add Partners.
Proprietorship Firm is different for a service based business and a product based business.
Service Based Business
- Providing services to customers online and offline. Examples are – Website Development/Digital Marketing/Consulting/E-Commerce Marketplace/Marketplace Business Models/Tickets and Hotel Bookings/Classifieds Websites.
Service Based Business have to take following action to register under the Sole Proprietorship Registration :
- Apply for the Service Tax Registration.
- Open a current bank account on the basis of Service tax Registration Certificate.
Note : Service tax Registration Certification is required only after crossing the limit of INR 9 lac turnover, but in the case of sole proprietorship firm banks always ask for a legal proof, so you have to show service tax Registration Certificate or any other local registration like Shop Act License. So we always recommend to have Service tax registration certificate.
Product Based Business
- Selling products to customers online or offline. Examples are Local Reseller/E-Commerce Website/Importer/Exporter/Selling on E-Commerce Marketplace.
So Product Based Business you have to take following actions :-
- Apply for the VAT/CST Registration from your State Government.
- Open a current bank account on the basis of VAT/CST Registration Certificate.
Apply now !