Sole Proprietorship Registration

Sole proprietorship is that type of business organization which is owned, managed and controlled by a single owner.
The sole proprietor has unconditional and full control over its business.

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What is Sole Proprietorship?

Sole proprietorship is a business that can be owned and controlled by one person. There are no partners in the business.

Sole Proprietorship is simple to start and has very few regulatory compliance requirements for conducting the operation. Proprietorship registration is ideal for entrepreneurs who are getting into the business for small businesses with few clients. A sole proprietor is the sole owner of the proprietorship business. Hence, a business will be carried forward by making new bank account for the business and GST registration will be done by using PAN and Aadhar of the proprietor. The proprietor is completely responsible for all the assets and liabilities of the business.


Sole Proprietorship Registration

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Advantages of a Sole Proprietorship 

  • Low Operational Cost: Operational cost of sole proprietorship is very low in comparisons to other types of businesses.
  • Easy Compliance: The significant advantage of the Proprietorship is that it doesn’t require any additional compliance in most cases.
  • Complete Control: Proprietorships firms are owned and operated by just one person.  The owner or proprietor is in complete control of business decisions.
  • Requires Less Investment: Registering a proprietorship in India requires very little investment. Hence, anyone who wants to start business with low funds can go for proprietorships as no investments are involved. The income generated through operations can be directed into the proprietor’s pocket or reinvested as he or she sees fit.
  • Taxation: Profits flow directly to the proprietor’s personal tax return; they are not subject to a second level of taxation. In others words, profits from the business will not be taxed at the business level.
  • Dissolution: The business can be dissolved as easily and informally as it was begun.

Disadvantages of the Sole Proprietorship

  • Capital: The amount of capital available to the business is limited to the owner’s personal funds. It is difficult for proprietor to raise funds from angel investor, venture capital firm, bank also have certain limitations on the amount of credit they can lend to proprietor.
  • Unlimited Liability: Sole proprietors have unlimited liability for all debts and legal judgments incurred in the course of business. Thus, a liability lawsuit by a customer will not be made against the business but rather against the owner.
  • Employee: The business may not be able to attract high-caliber employees whose goals include a share of business ownership. Sharing the benefits of ownership, other than simple profit-sharing, would require a change in the legal form of the business.
  • Deduction of Expenses: While filling income tax return some employee benefits, such as owner’s life, disability, and medical insurance premiums, may not be deductible, or may be only partially deductible from taxable income.
  • Lifespan: The entity has a limited life; it exists only as long as the owner is alive. Upon the owner’s death, the assets of the business go to his or her estate.

Documents Required

Passport Photo

Copy of PAN Card

Copy of Electricity Bill

Copy of Aadhar Card

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The Key Registration areas for Proprietorship in India.

  • MSME Registration: If the registration of Proprietorship is with the Ministry of Micro, small and medium enterprises, MSME registration can be obtained.
  • TAN Registration: A proprietor must obtain a TAN registration from the Income Tax Department if the proprietor is making salary payments wherein the TDS reduction is required.
  • GST Registration: GST registration is to be obtained if the proprietor is involved in selling goods or services that cross the GST turnover threshold.
  • Import-Export Code: The IE Code can be obtained from the DGFT in the name of the business- if the proprietor is undertaking export or import of goods in India.
  • FSSAI Registration: FSSAI registration must be obtained from the Food and Safety and Standard Authority of India in the operator’s name if the Proprietorship is involved in the selling or handling of food products.

Sole Propreitorship Registration

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(all inclusive fees)

  • Gst Registration
  • E-Way Bill Portal Registration
  • Pan And Tan
  • Gst Invoicing Formats
  • 3 Months Free Return Filing
  • Current Account Opening Support
  • Support Regarding Gst Rates/ Hsn
  • Dedicated Gst & Eway Bill Expert For First 3 Months

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  Will my proprietorship firm have a separate legal identity?
No, the proprietorship firm and the proprietor are one and the same legally. The PAN of the proprietor will be the PAN of the firm. Therefore, there will be no separate legal identity for the business. The assets and liabilities of the business and the proprietor will also be one and the same.
  Can people invest in sole proprietorships?
Sole proprietorship is a business that can be owned and controlled by one person. Other person can not invest in sole proprietorship
  How does a sole proprietorship get taxed?
As a sole proprietor you must report all business income or losses on your personal income tax return; the business itself is not taxed separately.
  Is audit compulsory for sole proprietorship?
No audit is not compulsorily required, however a tax audit is required if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore.
  What are the annual compliance requirement?
As a sole proprietor, you must file Income Tax Return annually. Also, you need to file your GST Return if you are registered under GST. A sole proprietor should also deduct TDS and file TDS return if liable for Tax Audit.
  What are the licenses required for proprietorship registration?
It generally differs from state to state as in Maharashtra a Shop and Act license is required and for West Bengal, the trade license is required.
  How long does the sole proprietorship exist?
The sole proprietorships exist as long as the proprietor is alive and is desiring to run the business.
   Is there any certificate of Incorporation?
No, there is no certificate of Incorporation given.