Sole Tradership or Sole Proprietorship, Meaning & Firm Registration Process
Sole Tradership or Sole Proprietorship, Meaning & Firm Registration Process
Sole Tradership or Sole Proprietorship-Meaning & Firm Registration. Step-by-step registration guide for Sole Trader ship/Sole Proprietorship Firm Registration in Pakistan is being described for new entrepreneurs who would like to start their small business. With the help of this guide, you would be able to get your new sole trader ship (also called Sole Proprietorship) and could start your new business just in one day.
Sole Tradership/Proprietorship-Meaning
A sole tradership or sole proprietorship is a small business owned by a single owner, which is not a company but a proprietary firm. Small businesses run by individuals who are personally responsible for the debts they incur. Sole tradership or proprietorships does not necessarily be registered as a legal entitiy like partnerships or private limited companies. Individuals can establish businesses under fictitious names or under their own names as sole traders/proprietors. It is an inexpensive business to start. The sole traders /proprietors of the business may be sued by creditors if it fails to earn a profit. His personal assets could be used as collateral to discharge the business’s liability. It can only survive if the owner lives, but if the owner dies, none of its chances of survival are good. After a certain point, expanding the business becomes more challenging. These entrepreneurs do not need to attend board meetings or annual meetings, which is an advantage. They have to file their own tax returns as an individual. In addition, entrepreneurs who work for themselves have the advantage of working at their own pace.
Difference Between Sole Tradership/Proprietorship and Single-Member Company
There are many similarities between a sole tradership/sole proprietorship and a single-member company. However, it has several differences. The law and operations of a sole proprietorship differ from those of an SMC. If a sole proprietor has a shop as a place of business, he can register his business. A single member company is a company, registered from the only company registration authority, SECP, but the Sole Tradership/Proprietorship can be registered with the NTN from the FBR.
If you are planning to start a business, and you aren’t sure which type of business is best for you, here are some differences between a Single Member company and a Sole Tradership/Sole Proprietorship:
In terms of law and operations, SMCs differ from sole proprietorships. A sole tradership/proprietorship and a one-member company may appear the same, but their workings and structures differ greatly. In a Single Member Company, there is only one member and the company is separate and has limited liability. It operates similarly to a private limited company. A sole proprietorship is not considered a legal entity, unlike a partnership or company. Entrepreneurs who own their own companies do not have to attend board meetings or annual meetings. They sign and file their own personal income tax returns. They work when it is convenient for them. Individuals file individual tax returns to report their income and losses. If the proprietorship fails, the owner is personally liable for its debts.
Step-by-step Guide For Registration a Sole Tradership/Proprietorship Firm in Pakistan
Sole proprietorships (also called sole businesses) are usually run by just one individual. Owners do not have a separate legal entity and are responsible for all profits and losses. In addition, the owner has full control over and is responsible for all liabilities and debts incurred by the business. The owner is the only person who can make decisions for the business. Taxes on the business must be paid by the owner and his personal income tax must be filed. The rate of taxation for sole tradership/proprietorship firm is lower. Due to the owner’s unlimited liability, he or she is personally liable in the case of lawsuits and other debts. That is one drawback of this type of business structure. Partnerships and limited liability companies differ from sole tradership/proprietorships. Additionally, there is a difference between a standard sole proprietorship and a single-member company (SMC), which is a limited liability company with just one member. If you have difficulty deciding on a business structure? Please consult our senior lawyers who are near you.
Here are the steps you need to take to form a simple sole proprietorship:
(1) Select a unique name for your proprietorship company/business
(2) Create letterheads, stamps, and business cards that include the company name, logo, phone number, and address of the business.
(3) Create an account on IRIS through the FBR website, from which you will receive a National Tax Number (NTN). It is important to note that a lease agreement will be required for your house or office. An electricity bill, no older than three months, is also required.
(4) Bring your CNIC, letterhead, business card, NTN copy, and stamp showing your new business name to a bank of your choice.
(5) A bank account will then be opened in your business name.
(6) After these steps, you can start your business as a sole trader/sole proprietor.
(7) Now you can apply for GST Numbers, membership of Chambers of Commerce, PECs, PSEBs, and WEBOCs or PSWs, if required.
Sole Tradership/Proprietorship Certificate
A sole tradership or proprietorship does not have an official certificate issued by any governing body. Your contact information and firm’s name will only appear on your NTN.
We can help you Register a Sole Tradership/Proprietorship Through Our Senior Business Law Attorneys
You are welcome to contact our corporate law firm in this regard if you need assistance from a professional business lawyer. Only Rs. 5,000 is required for the registration of sole tradership/proprietorship. To find out more, please call +92-333-231-6871 or email us. As long as we provide our customers with professional and efficient service, our customers will not have to worry about spending a fortune on other legal professionals or agents.
Please bring the following documents with you or send us through email or WhatsApp +92-333-231-6871: Copies of CNICs for sole proprietorships Payment of the electricity bill of the business office/store/shop/workshop (not older than 3 months) Tenancy agreement for a business or residential property The proprietor's mobile phone number (not already registered with FBR) Email address of the proprietor (not previously registered with FBR
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