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Get your Proprietorship Firm Registration in just three simple steps
  • Get excellent guidance to choose a creative name for your Proprietorship firm
  • Obtain GST Registration based on business type and size
  • Open current account of proprietorship firm.
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Proprietorship Firm Registration

An Overview- Sole Proprietorship Firm Registration in India

It is a form of business structure owned or managed by a single individual. It has no need of registration with any statutory laws (Companies Act/ LLP Act/ Partnership Act). Since it is owned and managed by a single owner, it has become the most popular type of business among merchants and small businesses.

Specific registration of Sole Proprietorship firm is not required as it can only be identified through a general registration like GST, MSME, Shop or Establishment Act. Sole proprietors have unlimited liabilities and don’t have perpetual existence.

Any person can form a sole proprietorship firm. For any queries regarding the registration process, you can seek the help of Startup Club India. Go through the process listed below for hassle free starting of proprietorship firm.

Mandatory documents to register a Sole Proprietorship firm in India

To begin a proprietorship firm business in India, following documents are required:

  • Scanned copy of PAN card and Aadhaar Card
  • Scanned copy of Passport/DL/Voter ID
  • Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity Bill/Gas Bill
  • Passport Size Photo

Why to choose Sole Proprietorship Firm for business in India?

  • Easiest form of business to start

    A sole proprietorship business has no special registration procedures, and the business uses the proprietor's legal identity. As a result, a proprietorship can be established without the need for registration. Udyog Aadhaar registration and trademark registration may be obtained using the promoter's PAN and Aadhaar number to develop and protect the business's identity.

  • Less capital requirement

    This type of business structure does not require huge investment to start. It is an opportunity for those who want to start the business with low capital. There is no limit on the minimum capital requirement for sole proprietorship firm.

  • Sole Beneficiary of Profits

    Other than a sole proprietorship and a one-person firm, no other business form allows the owner to be the sole beneficiary of earnings. A minimum of two people are required in all other forms of entities, such as a partnership, LLP, or companies.

  • Minimal Compliances

    The compliance requirements for a proprietorship business are minimal because it is not registered with any government agency such as the Ministry of Corporate Affairs. Furthermore, if the firm's taxable revenue exceeds Rs.2.5 lakhs per year, the proprietor is only required to submit income tax returns.

  • Less Income Tax

    A sole proprietorship is not taxed as if it were a separate legal entity. Business owners, on the other hand, submit their business taxes as part of their personal tax filings. However, after deducting business expenditures, and tax deductions, if any, from gross revenues, a sole proprietor's business income is added to his own income.

  • No Audit Requirement

    In case of Proprietorship Firms, audit of accounts is required to be conducted only if the turnover exceeds Rs. 50 Lakhs/ Rs. 1 Crore

  • Privacy

    Because sole proprietorships are unregistered, the government does not keep a database with a list of all proprietorships. As a result, proprietorship firms are more private than a company or LLP whose information is available on the MCA website.

A detailed process to register a Sole Proprietorship Firm

There is no requirement of any registrations under any laws. But one should follow these steps to avoid any legal action on your business.

  • 1

    Applying for PAN card.

  • 2

    After obtaining a PAN card, or if the proprietor already has a PAN card, the next step is to keep a name for the sole proprietorship business.

  • 3

    The next step is to create a bank account in the firm's name. This bank account will be used for all firm transactions.

  • 4

    Though no particular registration is necessary to launch a sole proprietorship firm, a sole proprietorship firm must get some specific registrations in order to conduct business. A sole proprietorship must complete the following registrations on the basis business need–

    • The proprietor must acquire a Registration Certificate from the state where the business is located under the Shops and Establishment Act.
    • If the business revenue surpasses Rs.20 lakh/ Rs. 40 lakh as the case may be, the single proprietorship needs to register under GST.
    • Though it is not required, the sole proprietorship can register as a Small and Medium Enterprise (SME) under the MSME Act. While registration is not required, it is helpful for various benefits under MSME schemes.

FAQs on online Sole Proprietorship Firm Registration in India

Proprietorship firms are controlled by a single owner. Those who have less capital investment and want to start a business, then they can opt for Proprietorship firms.
You can start your business under Proprietorship firm within 3-4 working days.
In case of Proprietorship Firms, audit of accounts is required to be conducted only if the turnover exceeds Rs. 50 Lakhs/ Rs. 1 Crore.
If a sole proprietor has a turnover of less than Rs. 20 Lakhs/40 Lakhs, it is not mandatory for him to get registered and collect GST.
There is no requirement of minimum capital to establish the business as proprietorship firm.
If you want customers to be able to find you, talk about you and recommend you, you need a business name, which should define your business.
If you recruit people to invest in your sole proprietorship, your business will, by default, become a general partnership.
Proprietorship firm is known for its less compliance requirements. But you are required to submit the following in some conditions-
  • Income tax Return should be filed annually
  • GST Return (if applicable)
  • Income Tax audit (if applicable)

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