The easiest way to start off a business is as a sole proprietor. Many online marketplace sellers run sole proprietorship businesses. That is because it is the simplest to pull off by an individual. Also, ecommerce does not require substantial resources in the initial stage.
A sole proprietor enjoys the benefit of:
- Quick and easy business establishment
- Low formation costs
- Limited legal procedures and requirements
- Total control
Why should you register your sole proprietorship?
If your goal is to sell on online marketplaces or set up your own web store, your proprietorship will engage in retail business. When doing business you need to maintain a current account in your business’ name. But in order to do this you will need to prove that your business is a legal entity. For this you will need tax registration documents or a shop and establishment license.
For your web store to collect online payment, you must register your business. This way you will be allowed to integrate your website with a recognized gateway. Registering your online proprietorship helps you avoid confusions and hassles with the law and also a registered business is likely to gain more trust.
How do Online Sellers register their sole proprietorships?
Legalizing a sole proprietorship as an online seller is pretty the much the same as for an offline seller. Here’s a list of the essentials:
- Identity and address proof of the sole proprietor – Adhar card, driving license or passport
- Sole proprietor’s PAN card
- Electricity bill or sales deed copy of property owned by the proprietor
- Cancelled cheque or a copy of the proprietor’s bank statement
- Rent agreement, electricity bill or no objection certification (NOC) to the property where business will be conducted
- A security in the form of a fixed deposit or a guarantor (in some state) for VAT/ CST registration
Step – 1
Sole proprietorship registration can be done online with help from various entities. You can also do it yourself by approaching your nearest municipal corporation office.
Step – 2
You must prepare the required documents ass listed above and fill up a registration form, submit an undertaking and pay the required fees.
Step – 3
Apply for VAT/CST registration certification.
Step – 4
Open a current account with any bank of your choice by providing proof of your company’s registration.
Licence required by a sole proprietorship:
The kind of licences you need as a sole proprietor will depend on the kind of business you’re running and how you run it.
- VAT/CST certification is essential if you want to sell goods over the internet.
- Shops and establishment license is a necessity only if you want to have a physical store or online store and if you plan on hiring employees. It is an absolute essential in case of payment gate way integration.
- Professional tax is paid by every businessperson. However, the requirements of this tax vary from state to state.