Sole proprietorship is usually the most favored option for home-based businesses. It is a basic corporate structure that gives a formal status to any business. These are easy to establish, and taxes from the concern can be reported on your personal tax return.
Although establishing this type of entity is easy, getting financing for such a concern can be a bit difficult, and the proprietor is personally liable for the business. In case of a legal claim by a customer, or if there is a financial problems with the business, the creditors can sue the proprietor.
How to register a Sole Proprietorship concern?
This is quite simple, however, instead of doing it yourself, get a tax consultant or lawyer to do it for you, it is not expensive. The following steps need to be taken:
i. Decide on and select a Business Name;
ii. Print Letter Heads, envelopes and your business/visiting card;
iii. Write an Account Opening Request to your Bank, stating that this is your business and you are the sole proprietor of it;
iv. Open an account at a local bank’s branch close to you;
v. Next request the bank to issue a letter stating that this is your account and business;
vi. Submit the bank certificate and your application with the Tax Authority i.e the FBR (Federal Board of Revenue) Federal Board of Revenue (FBR) formerly known as the CBR Central Board of Revenue;
vii. If you are on a job, you already have a NTN (National Tax Number) – the same NTN will be used for your Sole Proprietorship status.
viii. Once the status is added, you are a registered legal entity.