A sole ownership normally called as a sole trader or ownership, is an unorganised business that has only 1 owner who pays income tax on profits earned from the business.
Sole proprietorship is the easiest type of business to establish or take apart, due to a lack of government regulation. As such, these types of businesses are very popular among sole owners of businesses, individual self-contractors, and consultants. Many sole proprietors do business under their own names because creating a separate business or trade name isn’t necessary.
Sole proprietorship is best kind of business to ascertain or take apart, thanks to a scarcity of state regulation. As such, these types of businesses are very popular among sole owners of businesses individual self-contractors, and consultants. several sole proprietors do business under their own names as a result of making a separate business or brand is not necessary
Formation of Sole proprietorship
Sole trader business is started by the initiative of a one person. He prepares the blueprints of the business and arranges the required finance. No legal formalities are needed in the formation of sole proprietorship
Following are the steps to start and get registered a sole proprietorship business. Steps involve for Registration of Sole Proprietorship in Pakistan are easy but it is highly recommended to hire some management consultant, with strong knowledge of tax and business laws.
Following are the steps for registering a sole proprietorship
- First step is the finalization of “Business Name”, a name relating to major activity of business is highly appreciated but one can choose any name.
- Final the business office or address, you may choose your residential address as business address
- Design a business letter head with logo, however logo is not necessary.
- Preparation of business stamp, all big stationers make stamp.
- Fifth and the most important step is to apply for National Tax Number (NTN) certificate. Following documents are required for applying Business NTN:
1.CNIC of the Person Applying for Sole Proprietor Registration.
2.Name of the Business.
3.Address of the Business.
4.Letter Head of the Business.
5.Electricity Bill of the Address.
6.Bank Account Number, Bank Name and Branch
Advantages of Sole proprietorship
The main advantages of proprietorship are as follows:
- Easily formation: A sole proprietorship can be established easily and quickly.
- Motivation to work: The sole proprietor is motivated to make the best possible use of his skills and resources to increase profits.
- Quick decisions: The sole proprietor is completely free to take decisions and to implement them. He need not consult others or seek their approval.
- Independent Control: The sole proprietor has independent control all over his business
- Secrecy of affairs: He is not expected to share secrets with others