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Proprietorship Registration

Proprietorship Registration is the simplest form of business registration and it involves fewer costs and compliances. The proprietor is the single owner of the whole business. An individual can start a business from home or any premises with a minimum amount of capital.

Control and management lie in the hands of a single person. There are many tax benefits available for the registered sole proprietorship business.

The profit and losses are borne by the sole owner because there is no distinction between the owner and the business.

Process of Proprietorship Registration

The Proprietorship firm is an unregistered business where the owner of the business pays income tax on profits earned by the business. There is no specific registration required to start a sole proprietorship firm yet certain basic registrations are required to be obtained by a Sole Proprietorship firm. The following steps are discussed for registering a proprietorship firm:

Step 1: Obtain Aadhar Card

Aadhar card is a mandatory requirement for the legal operations of any business in India. An Income tax return is filled only when the taxpayer has linked the Aadhar number with a PAN card with the help of the government website electronically.

Step 2: Apply for a PAN Card for Proprietorship Registration Online

The proprietor cannot file an IT return in the absence of a PAN card. There is a government portal where the proprietor can apply for PAN at a nominal fee. The documents required for PAN application include a photograph, ID proof and address proof. The online submission of the PAN application can be made after validating it through Aadhar e-KYC.

Step 3: Selecting a Unique Name

The proprietor must choose a name for the business. The name must be unique and must not infringe any registered trademark. It is recommended to register your unique name of the Proprietorship firm under the trademark Act, 1999 for protecting the business name from being copied by others.

Step 4: Documentation for Sole Proprietorship Registration Online India:

The owner must collect the requisite documents for registration and decide on the registered office for setting up the business. A complete list of documents is discussed below.

Step 5: Opening of Bank Account in the Name of the Business:

After collecting the documents, the Proprietor can approach the bank for the opening of an account. The other documents could be electricity bills

Step 6: Securing the Shop and Establishment Act License:

The Shop and Establishment act license is legally compulsory to obtain as per the local laws. It has been issued on the basis of the business and its employees. All sole proprietors who own a shop or establish a commercial establishment must obtain the license.

Step 7: MSME Proprietorship Registration

After the GST registration, the proprietor needs to apply for a Udyam registration certificate. Through the registration of the business, the proprietor can avail of various benefits provided to Medium, Small and Medium Enterprises under the government schemes.

Step 8: Registration under GST for Sole Proprietorship:

The sole owner should register for GST when the annual turnover exceeds the limit prescribed in the Act. If the business is carried out within the state and doesn’t cross the turnover limit, registration is not compulsory..

Step 9: Other Registration for Sole Proprietorship:

In case the sole owner is carrying on the business with food, he shall get a FSSAI Registration. One can obtain the sole Proprietorship registration online free when the business deals with Import or export, the owner must obtain the Import and export code..

Proprietorship Firm Registration Documents

The documents required for the registration of the proprietorship firm are given below:

  • Self-attested copy of the Aadhar card of the proprietor: The income tax return (ITR) can be filled when the sole proprietor has linked his PAN with his Aadhar card..
  • Self-attested PAN card of the sole owner : For the application of PAN card, the photograph of the proprietor is needed with identity proof and address proof.
  • Shops and establishment registration certificate is also known as Proprietorship registration certificate which is required for opening a current Bank Account
  • Business Office Proof:When the business activities are carried out on a rented property then it must be secured with the No objection certificate (NOC) from the landlord. The applicant must provide an Electricity bill when the property belongs to him. There are additional documents required for the establishment of the business.
  • Passport-size photograph of the Proprietor.
  • E-mail ID and phone number .
  • Certificate by a Chartered accountant..

The process of registration takes not exceeding 2 days. However, the time taken may depend on the nature of registration.

Mansee Online
Expertise in Private Limited


Mansee Online

Expertise in Private Limited Company


Obtaining GST Registration for Proprietorship Firm

Goods and services tax is an indirect tax that replaced all the prevailing indirect taxes i.e., excise duty, service tax, etc. Sole proprietorship registration in India is not a complicated process and there is only certain registration that is necessary..

Every trader exceeding an amount of turnover needs to obtain GST registration. When the turnover exceeds Rs. 40 lakhs for trading business then GST registration is required for Sole proprietorship.

When the turnover exceeds Rs. 20 lakhs for a service entity, then GST registration is required for Sole proprietorship. The GST registration for proprietorship firms is required for eliminating the flowing effect of tax and improving efficiency.

The following are the documents required for registration under GST Act:

  • PAN card
  • Aadhar card
  • Photograph of the sole proprietor
  • Bank account details furnished by a copy of the cancelled cheque, the front page of the passbook, bank statement on the proprietorship registration government website
  • Address proof of registered office – In the case of the self-owned property then the landline bill, copy of electricity bill, water bill, and property tax receipt and in the case of the rented property; the rent agreement and NOC from the owner of the leased property.

The process of GST registration for a sole proprietorship is given in the following steps:

Step 1: Visit the portal of GST by the government of India

Step 2: Click on registration and then a new registration

Step 3: Fill in all the details in the form and then click on submit

Step 4: A temporary registration no. is generated

In case a person has not filled out the complete application, then the TRN number is used to fill in all the details. The following details have to be submitted for proprietorship registration:

Business Details

It is necessary to provide the trade name of the proprietorship firm with the tax jurisdiction

Proprietor Details

These include ID proof, address proof and a photograph.

Authorized Signatory

The declaration by the Proprietor stating himself as an authorized signatory

Principal place of business

The address must be provided with proof specifying whether self-owner or rented property.

Goods and Services

Select the HSN or SAC code for the Goods and services respectively applicable to the business


Tick the verification box on the screen and then select the authorized signatory. Once the application is submitted, an Aadhaar authentication is required to submit the application and ARN will be generated. The GST registration certificate will be generated.

Compliances in a Proprietorship Registration

    There are a few obligations for a proprietorship firm given as follows:

  • Registration for GST depends on the nature of the business and when the annual turnover exceeds Rs. 40 lakhs or selling the goods outside the state
  • Shop and establishment license issued by a municipal or any relevant authority of the state
  • A registering authority license such as a Certificate of practice issued by the department or organization concerned
  • Registration document issued in the sole proprietor’s name by state or central government.
  • Importer Exporter code (IEC) issued to the sole proprietor by the director general of foreign trade (DGFT)
  • Complete Income tax returns of the proprietorship registration where the income of the business is reflected.
  • Utility bills including telephone and water bills.
  • Drafting of financial statements
  • Tax audit compliance
  • A sole proprietor is also required to keep bills/invoices of purchases, sales and expenses made during the year. Documentation of invoices of sales and purchases is done irrespective of the annual turnover generated.
  • A sole proprietor must file tax returns annually. The income/losses of the sole proprietorship firm are the same as the profit/losses of the sole proprietor. A sole proprietor is required to deduct tax at source (TDS) whenever it is required for the purpose of tax auditing.

Features of Sole Proprietorship

A Proprietorship registration is a business whose ownership and management are in hands of a single person. Some of the key features of a Proprietorship firm are as follows:

1. No Separate Identity

In legal words, the business and its owner are the same. He is solely responsible for bringing the capital required whether from private funds or by taking loans from the banks.

2. Risk Bearing

TThe proprietor is the sole beneficiary of profits and the sole bearer of any losses incurred. He enjoys all the profits from the business.

3. Management and Control

The sole proprietor is responsible for the management and control. He can employ a manager or other persons for this purpose.

4. Unlimited Liability

TThe sole proprietorship registration is the sole bearer of all the losses and is personally responsible for the liabilities of the firm. The title of ownership and the business is not separated.

5. Flexibility of Organization

In case of any changes in the business, the sole proprietor doesn’t need anyone’s permission and he can make changes without delay. It has a minimum compliance requirement. There is no compulsory registration for the business.

6. Life of Business

The business has no life of its own. It is dependent on the owner because the owner and business are the same in the eyes of law. The registration process for Sole proprietorship is conducted on the official portal of the government

7. Minimum Legal Formalities

There are no special rules and regulations followed by sole proprietorship businesses. Therefore, it doesn’t need to be incorporated or compulsory registration.>

Benefits of Sole Proprietorship Registration

The benefits offered by a sole proprietorship firm are given below:

1. Easy to Establish

A person who is seeking to run his business as a sole proprietor doesn’t need to undergo any registration process. He only needs to secure a business-specific license to run the business legally.

2. Seek Minimal Investment

It is a low-cost business idea; it is chosen by small businesses like retail shops and grocery retailers.

3. Ensures No Profit Distribution

The sole owner of their business and uncompromised control over their profit.

4. Adheres to Minimal Compliances

The business doesn’t come under the ambit of any specific law.

5. Attract Lower Taxes

In proprietorship registration, the tax authority doesn’t treat proprietors and businesses differently. It is a way to disclose profit and income tax returns.

6. Seamless Decision Making

The proprietorship business offers complete authority to the owner and to take any decision regarding business affairs without the intervention of anyone else.

7. No Auditing Requirement for Minimal Income

The financial accounts of the proprietor are not mandatory for auditing requirements.

Proprietorship Process

Checking Name Availability

Documents Required

  • Aadhar card of the Proprietor
  • Copy of the PAN card
  • Photograph
  • Shops and establishment registration certificate
  • E-mail ID and mobile number
  • Certificate by a Chartered accountant.

Filing of Documents

Signing of Documents

  • The registration documents are self-attested by the Proprietor.
  • Documents for current bank account opening.
Filing of Documents

Obtaining DSC and DIN and Company Name

  • Shop and Establishment Act License as per local laws
  • MSME Registration for Medium, Small and Medium Enterprises
  • GST Registration when the turnover exceeds the threshold limit.

Filing of Documents

Other Registration for Sole Proprietorship

  • FSSAI Registration for food businesses
  • Import or export code for business dealing in the Import or export of goods or services.

Proprietorship vs Limited Liability Partnership (LLP) vs Company

Basis LLP Proprietorship Private Limited Company Partnership
Meaning It is a form of partnership that has limited liability for each partner. It is a business owned by a single person who is responsible for the management and personally liable for debts. It is a privately held business by two or more individuals having limited liability. A business held by two or more partners who share the profits and losses.
Registration Process It is registered under the Limited Liability Partnership Act, 2008 There is no compulsory registration required for Proprietorship The Pvt Ltd company is registered under the Companies Act, 2013. Registration is voluntary and not compulsory and optional for partnership firms.
Name of the Entity The name must be as per the naming guidelines by the MCA and end with the LLP words. A sole proprietor can choose any name for the business. The name should be as per the guidelines and end with the Private Limited Company. Any name can be chosen by the partners for the partnership.
Legal Status of Entity An LLP has a distinct identity from its partners. A proprietor and a business are the same. A Pvt Ltd company is a separate entity from its members. A partnership does not have a separate status from its partners.
Minimum Number of Members The minimum number of members is two for an LLP. The sole owner is the only member in this business. The Pvt Ltd company has minimum two members. There must be at least partners coming together for partnership.
Maximum Number of Members An LLP has a maximum of unlimited partners. A proprietorship has a single person who is the owner. A Pvt Ltd Company has a maximum of 200 members. A partnership can have unlimited members.
Member(s) Liability An LLP has limited liability for its partners. A proprietorship has an unlimited liability of the sole owner. A Pvt Ltd company has limited liability of its members. A partnership has unlimited liability on their partners.
Existence or Survivability The life of business for an LLP does not depend on its partners A proprietorship depends on the sole proprietor. A Pvt Ltd company has perpetual succession. A partnership business is dependent on its partners.
Documents Needed for Registration An identity and address proof of partners and registered office proof is required. An Aadhar card is required for MSME registration. An Identity proof with address proof and photos, DSC of directors and members are required. An identity proof with PAN card copy is required in case of registration.
Annual Filings An LLP has minimal compliances. A proprietorship does not have compulsory registration and thus, no compliance. A Pvt Ltd company has to submit the annual filing for every year with the Registrar. A partnership is not required to file annual accounts.
Registration Cost The cost of registration is government fees and professional charges. There is no compulsory cost of registration as it is voluntary. The cost are the incorporation cost and professional fees. The cost of registration is voluntary.
Statutory Meetings There is no requirement for annual general meetings. There are no provisions for meetings. A Pvt Ltd company must conduct an annual general meeting. There are no provisions for conducting meetings.
Taxation The tax rate of 30% is applicable. The tax is levied on the total income of sole proprietor. The tax rate of 30% is applicable. The tax rate of 30% is applicable on partnership.
Transferability The ownership is transferrable. There is no transferability. The articles restrict the transferability of shares. There is no provision for transferability.
Foreign Ownership The foreigners can invest in LLP with RBI approval. The foreigners cannot start a proprietorship firm. The foreigners can invest in Pvt Ltd company. The foreigners are unable to start a partnership.

Frequently Asked Questions

What are the licenses required for proprietorship registration?
A firm or proprietor is not required to have a license for working. However, the owner can take the Shop and Establishment Act license. However, it is not compulsory to obtain a sole proprietor.
What are the registration required for a proprietorship firm?
The registration requirement is the PAN card of the proprietor, name and address of the business, a bank account in the name of the business, GST registration, if applicable and Shops and establishment act license..
What is a proprietorship certificate?
The proprietorship registration is not specified and certificates like Udyam registration and GST certificate and Shops and establishment Act can be obtained by the sole proprietor.
Can I register sole proprietorship online?
Yes, a sole proprietorship is a completely online process. The documents are submitted electronically and there is no need to present them physically.
How long does it take to register a sole proprietorship?
On average, the Certificate of Proprietorship Registration takes around 7-10 working days which is subject to document verification by the concerned authorities. You can contact Onlinexbrl for affordable proprietorship registration services.
How are sole proprietorship treated for tax purposes?
There are no differences between the business and its sole owner in the case of firm proprietorship. The profit derived from the firm is treated as income and is accounted for tax return.
How to register a sole proprietorship under MSME Act?
The Sole Proprietorship registration as a Micro, Small and Medium enterprise (MSME) under the MSMED Act. It is not mandatory but it is beneficial to be registered.

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Other Business Services

In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.

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