Sole Proprietorship Firm Registration
Sole Proprietorship Firm RegistrationProprietorship firm is the most popular business structure to start a business in India, but it is an unorganized structure. Most of the entrepreneurs start their business journey with this structure.
|Act||No specified Act|
|Number of members||Only 1|
|Separate Legal Entity||No|
|Statutory Audit||Not mandatory|
|Foreign Participation||Not Allowed|
What is a Sole Proprietorship Firm?
Most businesses in India start individually without other’s participation. An individual carrying out business activities is the sole proprietor and its business entity is said to be a Proprietorship Firm. The identity of an individual and the business are not different from each other. But due to the lower tax rate, flexibility and multiple advantages people prefer this structure for the early stage of business.
With the inclusion of partners, the control over operation reduces. Hence, these proprietors choose to run the business single-handedly and land upon sole proprietorship firm registration. Although there is no specific Act to regulate this organization, there are many ways to register a Sole Proprietorship firm. Small businesses aiming to take lower risks prefer this structure.
Shops and Establishment Registration
Benefits of Proprietorship Firm Registration
You Are Your Own Boss
In a sole proprietorship, the proprietor has all the rights to decide what to do and how to operate. A proprietor neither needs to report someone nor take orders from anyone else. There is no interference from a third party. Unlike a corporate firm, there are minimal compliances or disclosure requirements during the whole financial year. Hence, Government interference is also very less.
Easy To Establish
It is relatively easy to establish and register a sole proprietorship business. There is no specific process to be followed to set up this business. Also, the cost of sole proprietorship registration is very less compared to any other business structure. The business runs on the identity of the proprietor himself. He can run any legal business in his own name or with a different legal name as a brand.
You Own Whole Share Of Profit
The proprietor is the only owner of the business and therefore he owns the whole share of the business profit. Also, the business assets are treated as assets of the proprietor and vice-versa. He can decide when to withdraw profit or to reserve.
The proprietorship business is not treated separately for income tax purposes. The tax slab as specified for an individual’s income is only applicable to the income of the business. The rates of tax are lower compared to other business structures like companies and partnerships. The benefit of deductions is an added advantage with combined ITR for individuals and the business.
Information is not made Public
Unlike Companies, Limited Liability Partnerships, etc. where financial statements and audit reports are made public for the users through the MCA (Ministry of Corporate Affairs) portal, the financial reports of Sole Proprietorships remain in private hands. Even, the list of all proprietorships is not readily available with the Government officials.
Sole Proprietorships can be started with a very minimal amount of investment at the initial phase. So, it is a great opportunity for those who want to set up a business with low funds as no minimum capital is prescribed for starting a Proprietorship.
Documents required for registration of Proprietorship Firm
PAN Card Proprietor
Self- attested copy of Aadhar Card of proprietor
Details of the saving or current account of bank
Color Photo of the Business Owner
Business Address Proof
Electricity Bill, Property tax receipt, Sale Deed, Registered Rent Agreement (Latest)
Address Proof of the Proprietor
Address Proof (Voter ID, Driving License, Passport, Bank Statement, Electricity Bill).
Name of the Business
Tradename of the Business
NOC from the Owner of Premises
Establish Proprietorship in 3 Easy Steps
1. Answer Quick Questions
- Pick a Package that best fits your requirements
- Fill in our questionnaire that take less than 10 minutes
- Provide basic details & documents required for registration
- Make payment through secured payment gateways
2. Experts are Here to Help
- Assigned Relationship Manager
- Preparation and filing of Application
- Registration under MSME Department
- Firm Seal
- Allotment of TAN
3. Your Business is incorporated
- All it takes is 7 working days*
Process to register Proprietorship online
- Business registration consulting
- Collection of basic information
- Provide Required Documents
Day 2 - 3
- Preparation of online application
- Online Sole Proprietorship registration
- Application for allotment of TAN
- Application for Udhyam Registration
- Application for GST Registration
Day 4 - 7
- Registration Complete
Compare different business structures to choose the right entity type
|Sole Proprietorship Firm Registration||LLP Registration||Private Limited Company||One Person Company Registration||Partnership Firm Registration||Section 8 Company|
|Act||No specified Act||Limited Liability Partnership Act, 2008||Companies Act, 2013||Companies Act, 2013||Indian Partnership Act, 1932||No specified Act|
|Number of members||Only 1||2 – Unlimited||2 – 200||Only 1||2 – 50||Only 1|
|Separate Legal Entity||No||Yes||Yes||Yes||No||No|
|Statutory Audit||Not mandatory||Dependent||Mandatory||Mandatory||Not mandatory||Not mandatory|
|Foreign Participation||Not Allowed||Allowed||Allowed||Not Allowed||Not Allowed||Not Allowed|
Explore Sole Proprietorship Firm Registration – Its formation and registration
Does the proprietor have to be an Indian to start a Proprietorship firm?
The Proprietor must be an Indian citizen and a Resident of India. There is no approval required prior to the commencement of business. But, Non-Resident Indians (NRI) and Persons of Indian Origin can invest or start sole their proprietorship business only with prior approval of the Government of India.
Under which Government Authority is the application of Sole Proprietorship Firm Registration is submitted?
Sole Proprietorship is an unorganized business structure and there is no specific law enforced for the said registration. TaxClue.co.in provides services for Sole Proprietorship registration under MSME (Micro, Small and Medium Establishments) Development Act, 2006 of Central Government. The business entity must fulfill the registration requirement.
What is the minimum amount of capital required to register sole proprietorship online?
One can start a Sole Proprietorship Firm with any amount of Capital. An amount sufficient to commence the business should be introduced. As there is no restriction on infusion or withdrawal of amount, the proprietor can change capital anytime. Introducing the capital in Business is the sole decision of an owner of the firm i.e. the Proprietor.
How to open a bank account for a Proprietorship?
To open the bank account in the name of Sole Proprietorship Firm, Reserve Bank of India mandates that the proprietor need to provide two forms of registration for the Proprietorship along with the PAN Card, identity proof and address proof of the Proprietor. The two forms of registration can be any two of the following: MSME registration, GST registration, Registration under Shop & Establishment Act, Professional license, Chartered Accountant certificate or others as provided in the RBI’s Know Your Customer norms or the requirement of the respective Banks.
How to register the name of a sole Proprietorship business?
There is no registry or regulation for registering the name of a Sole Proprietorship Firm. Therefore, the name of a sole proprietorship company can adopt any name based on its availability such that it does not infringe on registered trademarks. Since there is no registry or regulation for registering the name of a Proprietorship, the only way to ensure the exclusive use of the business name is to obtain a Trademark Registration of a business name.
Will my Proprietorship firm have a separate legal identity or new PAN card after registration?
There is no separate identity of a proprietor or its business even after the sole proprietorship firm is registered. Hence, the PAN card of the firm and the Proprietor is the same. The assets and liabilities for the proprietor and the proprietorship also remain the same.
What are the benefits of Proprietorship Firm Registration under MSMED Act?
The registered entity under MSMED Act can avail subsidies, incentives, and schemes launched by the Central Government with respect to the specific Business on the basis of a registration certificate.
Who can apply for registration under MSMED Act?
Any business entity can apply for this registration. However, recently, the Central Government has excluded the activities of Trading to be registered under this Act. The business with Trading Activities can apply for registration under Shop & Establishments Act.
Can I have partners in a Sole Proprietorship Business?
Characteristics of a Sole Proprietorship Firms is such that it cannot have any other Business Partner as it is owned and controlled by one person itself. If your Business requires the involvement of Partners, you may opt for a Partnership Firm, Private Limited Company, or Limited Liability Partnership, as the case may be.
Can other people invest in a Proprietorship?
Sole Proprietorship Business entity is owned, managed and controlled by one person. So, Proprietorship firms cannot issue shares nor have investors.
What are the compliance requirements for starting a Sole Proprietorship Firm in India?
Proprietorship will have to file their annual tax return with the Income Tax Department. Other tax filings such as GST returns filing may also be necessary from time to time, based on the business activities performed and registrations opted. However, one needs to file the annual report or accounts with the Ministry of Corporate Affairs, which is required for Limited Liability Proprietorships and Companies.
Can I later convert my Proprietorship Business into a Company or LLP?
A proprietorship can be taken over by the company or LLP. However, the procedures for same are cumbersome, expensive and time-consuming. Therefore, it is wise for many entrepreneurs to consider starting the LLP or Company instead of a Proprietorship after consultation with experts.
What comes as a part of the Legal Documents Library?
For Private Company registration in India, following requirements must be fulfilled:
1. Minimum 2 directors shall be appointed, out of which one must be a resident of India.
2. Minimum 2 shareholders are required for this registration. Here, an individual may become shareholder and director at the same time.
3. A place of business in India must be provided as a registered office address.