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Your Sole Proprietorship Registration
Own your venture wholly. Give wings to your entrepreneurial dreams. Start your business at INR 1699/- only.
A sole proprietorship firm means a type of business entity that is owned, controlled and managed by a single person. The owner of the Business is called Sole Proprietor of the Firm. As the business is run by a natural person, there is no legal difference between the promoter and the business. The promoter himself receives all the profits. Sole Proprietorship firm does not require any formal registration.
Benefit of Proprietorships Businesses
Low Compliance Cost
There is no requirement for compliance as like Private Limited Company. Private Limited Company incorporation cost around 10 to 15 thousand, but sole proprietorship business not required such cost for start-up of new business. Audit is applicable, if the gross receipts/turnover of the proprietorship entity exceeds the amount of Rs. 2 Cr. No requirement to file any annual return as like in Private Limited Company.
Very Flexible
Under the proprietorship business you can simply pay tax at 8% of your Turnover/Gross Receipts, if the Turnover/Gross Receipts are not exceeding the amount of Rs. 2 cr. in during the previous financial year.
Easy to Start
Private limited companies take 10 to 15 days in incorporation, but proprietorship does not require much investment of time to put the things in order. For startup of proprietorship no need to get the name approval from any authority likes MCA.
Control
As the sole owner of the business, you have complete control over all the operations, and you get to make all the decisions. You don’t have a Board of Director’s, shareholders, or other owners to answer to.
Cost for Sole Proprietorship Registration
ESSENTIAL
₹ 1499/-
(All Inclusive)
SSI/MSME Registration.
Easy EMI's Transparent Pricing
ENHANCED
₹ 2999/-
(All Inclusive)
SSI/MSME Registration
GST Registration
Easy EMI's Transparent Pricing
ULTIMATE
₹ 8899/-
SSI/MSME Registration
GST Registration
Trademark (1 application 1 class) (start ups, proprietorship & small business)
Easy EMI's Transparent Pricing
Compliance required by Proprietorship firm
GST Registration
GST registration is one of the ways to get a proprietorship registration done. You can get yourself registered under GST if your annual turnover is more than Rs. 40 lakhs. Also, if you are doing online business (selling through amazon, flipkart etc.), you are required to get a GST number under goods and service tax Act.
GST Return
The proprietorship firms registered under GST are required to file the GST return on a monthly, quarterly and annual basis. GST return is a document that contains the details of the income of the taxpayer. As filing of GST returns is mandatory for all the registered Taxpayers including Partnership firms.
MSME registration
You can get yourself registered as Small and Medium Enterprise (SME) under the MSME Act. The application can be filed electronically. Although it isn’t compulsory to register as an SME, it is highly beneficial, especially at the time of taking loan for the business. Also getting Udyam Aadhar Registration will be very beneficial.
Accounting
The accounting for a sole proprietorship does not require a separate set of accounting records, since the owner is considered to be inseparable from the business. Nonetheless, it is always advisable to maintain records for business activities of a Proprietorship firm, in order to judge whether these operations are generating a profit.
IT Return
Income tax filing must be filed by all proprietorship having a taxable income over the exemption threshold. In some cases, a tax audit would also be required. Since proprietorship is considered to be one and same as the proprietor, the income tax return filing procedure for a proprietorship is similar to individual income tax return filing.
Tax Audit
There is no obligation for a sole proprietor under any law to get the accounts except in case where the turnover of a proprietary business in any financial year exceeds 1 Crores Rupees and gross receipt from profession exceeds 50 Lakhs Rupees. In both cases, the audit of accounts is compulsory for a proprietor under the Income Tax Act.
ENTITY COMPARISON GUIDE
| TYPE | PROPRIETORSHIP | PARTNERSHIP | LLP | PVT | OPC |
|---|---|---|---|---|---|
| Members | Maximum 1 | 2-20 | 2- Unlimited | 2-200 | 1 |
| Legal Status of Entity | Not Considered as separate Legal entity | Not Considered as separate Legal entity | Considered as separate Legal entity | Considered as separate Legal entity | Considered as separate Legal entity |
| Members Liability | Unlimited Liability | Unlimited Liability | Liability of its members is limited | Limited to the extent of share capital | Limited to the extent of share capital |
| Registration | Not Compulsory | Optional / Can be Registered under partnership Act 1932 | Registered Under MCA | Registered Under MCA | Registered Under MCA and Companies Act 2013 |
| Transferability Option | Not Allowed | Not Allowed | Can Be Transferred | Can Be Transferred | Allowed to only one person |
| Taxation | As in Individual | 30% of Company Profit | 30% of Profit Plus CESS and Surcharges applicable | 30% of Profit Plus CESS and Surcharges applicable | 30% of Profit Plus CESS and Surcharges applicable |
| Annual Filings | Income Tax Returns with the Registrar of companies | Income Tax Returns with the Registrar of companies | Filed with the registrar of the company | Filed with the registrar of the company | Filed with the registrar of the company |
Procedure for Establishing Sole Proprietorship Business in India
The Section Below Reflects the List of Mandatory Documents That Is Required for Establishing a Sole Proprietorship Business.
Step 1: Obtain Aadhar Card
Aadhar number is a must-have requirement for legalizing any business in India. Also, an IT return can only be filed if the taxpayer has synced his/her PAN card with PAN. The applicant can approach the nearest Aadhar, Seva Kendra or E-Mitra to secure the Aadhar number in a legit way.
Step 2: Apply for PAN Card
You cannot file an IT return in the absence of a PAN. There is a dedicated government portal that enables a person to apply for PAN at a nominal fee. The standard documents required to apply for PAN includes applicant photograph, ID proof, & address proof. The online submission of the PAN application can be made after validating it via Aadhar e-KYC. After this, it is scrutinized at NSDL for verification. Post successful verification, the authority grants the PAN number to the applicant within a week. The hard copy of the same is routed to the registered address within 15-20 days.
Step 3: Open the Bank Account in the name of Business
Once you have secured the PAN and Aadhar Number, you can approach any designated bank opening a current account. Common documents required for serving this purpose include PAN, Aadhar Number, GST registration, and address and identification proof. Note: the applicant can furnish the copy NOC or rent agreement for address proof. Likewise, they can also facilitate utility bills to serve such a purpose.
Step 4: Secure Shop and Establishment Act License
A shop and Establishment license is a legal compulsion for a commercial establishment that vend goods or services to the customer. Owning a small establishment or a shop is a small form of business, and it is a legal compulsion for the owner to secure such a license.
Step 5: Register under GST
GST registration applies to all forms of business whose annual turnover is above the prescribed threshold limit. At present, businesses whose yearly turnover is greater than Rs 40 lakh are mandated to secure this registration. Keep in mind that GST also covers online business owners.
FAQ Frequently Asked Questions
Yes, provided the income of the sole proprietor is above the prescribed threshold limit as mentioned in GST law.
Commencing a sole prop business is not that tedious. To commence a sole proprietorship, all you need to do is:
Opt for a legally suitable business name.
Procure an apt location for your business.
File for business or state-specific licences that are in effect for the time being.
A sole proprietorship (aka sole trader, individual entrepreneurship, or simply Proprietorship) refers to a type of unincorporated establishment that is owned by a single person only. It is a simple business form that is quite popular in India.
The sole proprietorship model defies the concept of salary being transacted within the business. Whatever the owner earned as a sole proprietor is deemed his/her profit, not pay. However, you have the right to employ individuals and pay them a sole, but you cannot pay yourself that way.
Yes, a sole proprietor can be considered as self-employed because they operate business individually & do not work as an employee. Owing & operating your business affairs legally termed you as a self-employed business owner.
A sole proprietor lacks the adequate option for funding and third-party credit. Partnerships enable the business owner to share the operational and financial liabilities, thereby ensuring seamless growth for the business.
Most local establishments function as sole proprietorships, from grocery outlets to food vendors & even small manufacturers & traders. That doesn't mean that larger businesses cannot function as sole proprietorships. However, it is not advisable from a growth standpoint.
