Sole Proprietorship Registration India – A Step by Step Guide

Sole Proprietorship Registration India is known as a single person who owns and controls the business. The sole proprietor transmits the business entirely by and for himself. The owner manages and sole-responsible for all the profits and losses of the business.

It’s also a very popular form of business in India which is very easy to start a business by a sole proprietor and has lots of benefits. The decision must be taken after the availability of minimum requirements of financial resources and all tax-related matters.

In this article, we will be discussing the various registration acquired by a sole proprietor and the process of registration of a sole proprietorship business along with documents and fees.

What is the Procedure of Sole Proprietorship Registration India?

The Proprietorship firm is an unincorporated business where the owner of the business is subject to pay income tax on profits earned by the business. The difference between corporate structures and proprietorship firm is that the burden of liabilities is unlimited for the sole owner.

The following steps are given for registering a proprietorship firm:

Step 1: Selecting a Unique Name

The sole proprietor must select a name for the business. The name should be unique and must not infringe the intellectual property rights (IPR) of any registered trademark. 

For infringement purposes, the owner can trademark search on the IP India portal. It is recommended to register your unique name of Sole Proprietorship Registration India under the trademark Act, 1999, to protect your business name from being copied by others.

Step 2: Gathering all the Documents

The owner must gather all the documents required for the registration and decide on the business place where you want to set up the business. A complete list of documents is mentioned below.

Step 3: MSME registration for proprietorship firm

After gathering all the documents, the sole proprietor has to open a current bank account in the name of the business. After opening the bank account, the sole proprietor needs to apply for a Udyam registration certificate. 

Through Sole Proprietorship Registration India, the sole proprietor can avail of various benefits provided to MSMEs under the government schemes.

Step 4: Obtaining the Shop and Establishment act license

The Shop and Establishment act license is required to be obtained as per the local laws. It is issued on the basis of the business and the number of employees. All sole proprietors who own a Shop or Establish a commercial Establishment must obtain the license.

Step 5: Registration under GST for Sole Proprietorship India

The sole proprietors must register for GST when the turnover exceeds the threshold limit prescribed in law. If the business is carried out within the state and doesn’t cross the turnover limit, registration is not mandatory.

Step 6: Other Sole Proprietorship Registration India

In case of the proprietor is doing business with food and related articles, he must obtain FSSAI Registration. In case of Sole Proprietor is performing the business of Import or export, he must obtain the Import and export code.

What are the Documents Required for Sole Proprietorship Registration?

The proprietorship firm registration documents required are given below:

1. Self-attested copy of the Aadhar card of the Proprietor – The income tax return can only be filled out when the proprietor has linked his PAN with the Aadhar card.

2. Self-attested copy of the PAN card of the owner

3. Proof of name: Provide proof of the name of your Proprietorship firm.

3. Current Bank Account for Sole Proprietorship Registration India

4. Proof of address: Electricity bill and rental agreement, etc.

5. Passport-size photograph of the Proprietor

6. E-mail ID and mobile number for communication purposes

7. Registration number received under the Shop and Establishment act of the respective state.

8. GST registration number (if available)

9. Activities performed: Provide the details about your business objective.

What are the Compliances for Registration of Proprietorship?

The following is a list of compliances that are applicable to a proprietorship firm:

• Income tax filing: The business owner of a proprietorship is required to file a personal income tax return under ITR-3 or ITR-4
• GST Return filling: If Sole Proprietorship Registration India has GST registration, GST returns must be filled every month and quarter as per the scheme under which the business is registered.
• TDS Returns: In the case of proprietorship having employees or purchasing goods/services beyond a certain threshold – tax must be deducted at source and TDS return must be filled every quarter.
• There are some compliances based on the industry and the location of the proprietorship firm.

What are the Benefits of Proprietorship Firm Registration?

The benefits of registering a Proprietorship firm are as follows:

1. Fewer compliances – The proprietorship business can be started easily by just one person. There is a minimum need for compliance that is required to obtain the Sole Proprietorship Registration India.

2. Complete control – The sole Proprietor have complete control over the business. Since he is the only person, having the Registration of Proprietorship firm, secrecy can be maintained

3. Seek minimal investment – The business model of Proprietorship firm is a low-cost business idea. It is generally chosen by small businesses like retail, grocery shops, etc.

4. Attracts lower taxes – The tax authority doesn’t treat the Proprietorship firm and sole Proprietor differently. Thus, they do not need to pay separate taxes

Conclusion

A proprietorship firm business is the simplest to start. A proprietorship firm is not a legal entity, it refers to a sole person who owns and is personally liable for its debts. 

Sole Proprietorship Registration India is one of the most popular structures for Micro, small and medium enterprises. The government of India has not prescribed any method for the registration of a Proprietorship firm. 

Thus, the registration is recognized through tax registrations that the business is required to have as per the rules and regulations. We have discussed the process of various registrations under the Shop and establishment act license, GST registration, and Udyam registration. 

The sole proprietorship registration fee charged under government and professional charges are also minimal in comparison to the other registrations.