Registration Process and Starting a Sole Proprietorship in India
Sole Proprietorship Registration is a perfect option for individual entrepreneur, sole trader or someone who does not want to get into the long process of forming a company. In addition, setting up a new company requires an initial investment in for of fees which is not the case with sole proprietorship. First step starts with just opening a current account to ensure safe payments in the proprietorship’s name. Hence, generating a current account is considered to be the groundwork for starting this type of business.
One of the most common structures of business in India. According to GOI, Sole Proprietorship is a single person establishment where the individual manages and controls their business on their own. Accordingly, it is cost-effective as there no fees to pay during the initiation of the process. Further, the primary establishment is easy as there is no need for registration. Consequently, by omitting registration we are spared of government amenability and supervisory paperwork.
Few Other Benefits of Starting a Sole Proprietorship Firm
- The owner has overall control and claims the ownership stake
- Requires no minimum capital investment
- The profit solely belongs to the proprietor
- The tax assistances avert double taxation
- The owner is accountable only to file an annual tax return and pay tax as an individual
- No separate tax for the firm
Mandatory Requirements to Start a Sole Proprietorship
The four necessities to start the business are
- Aadhar card ‘
- PAN card
- Bank account
- Registered office proof (Rent Agreement or Property Documents)
Starting the Business
The process of registration is mainly to mark the existence of the establishments. In the case of registration, the corporation is brought into being through the eyes of the government. On the other hand, staring the business is bringing it into reality and thereby attaining functionality. In India, a sole proprietorship can be established with only two things:
- Choosing an apt name for the business
- Choosing the location of the business
As mentioned earlier, there is no rigid protocol to register a Sole Proprietorship. Because this is an extension of the proprietor. Nonetheless, its existence is established by generating a bank account in the name of the proprietorship. Otherwise, it can be through attaining the licenses necessary to conduct business.
By Opening an Account
The most important step in opening an account is the submission of correct documents. Thereupon, any of the two documents from the list below can be used for this purpose
- License or certificate from Municipal Officials under Shop and Establishment act
- Property Registration document
- Rent Agreement along with utility bill
- License from registering Authority
- License for the concerned individual from central or state government
- IEC code
- Income Tax return of the proprietor (Complete)
- Utility Bills
By Issuing License
Depending on the type of business, the license issued for registration varies. Few of them are:
- PAN Card for the Proprietor- Obtaining a PAN card is an absolute necessity in the business sector. Because, it aids in attaining license and certificates, company registrations, and filing the tax return for Sole Proprietorship. Emphasize that, the PAN remains the same for business and proprietor. Thereby, this is the first step while establishing a Sole Proprietorship.
- GST Registration– For manufacturing and trading businesses in India with expected turnover over Rs 40 Lakhs and Rs 20 Lakhs for special category states should get GST registration done. Further, all the businesses related to goods and services must possess a GST registration. Thereby, to attaining GST is a good license while trying to start a Sole Proprietorship.
- Shop and Establishment Act license- this acts as a proof of existence. Additionally, most businesses dealing with shops and factories issue this license
- MSME registration- easily attainable in most of the states in our country if the firm is acceptable under the MSME sector. Obtain Udyog Adhaar Certificate.
In conclusion, by attaining these requirements one can legally start a sole proprietorship business.
Created & Posted By Ravi Kumar
CA Article at TAXAJ
TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are:
Launch Your Start-Up Company/Business,
Trademark & Brand Registration,
Digital Marketing,
E-Stamp Paper Online,
Closure of Business,
Legal Services,
Payroll Services, etc. For any further queries related to this or anything else visit
TAXAJ
TAXAJ Corporate Services LLP
Address: 1/11, 1st Floor, Sulahkul Vihar, Old Palam Road, Dwarka, Delhi-110078
Related Articles
Proprietorship Firm Registration In Haryana
A Sole Proprietorship Registration is a business, which is owned, directed and run by a single. Proprietorship is recognized by other registrations such as services or sales tax registration. It is the most familiar form of business in India, ...
Proprietorship Firm Registration Kaise Kare
Proprietorship Firm 'Company' signifies any enterprise formed under the Companies Act, 2013. The procedure of registration of a company in India relies upon the type of the company. When a business or firm is held and governed by one individual, it ...
Proprietorship Firm Incorporation Process
Registering a Proprietorship Firm Name If you are worried about the legal requirements of establishing a company, you can always choose a Sole Proprietorship as your business entity. It’s not a legal entity and therefore, sole proprietorship ...
Proprietorship Firm Registration process in a step by step guide
Proprietorship Firm Registration Process A sole proprietorship firm does not need any specific registration, but the owner is advised to get some essential registrations for better operational functioning of the firm. The registrations required for a ...
proprietorship firm registration online
Proprietorship Registration Sole proprietorship is one of the oldest and easiest Business Structure to start in India. A proprietorship is a type of business that is owned, managed, and controlled by one person - who is the proprietor. As the ...