Proprietorship Registration Online in India

Sole Proprietorship Registration - An Overview

A sole Proprietorship is a simplified and convenient way to commerce a business in India. In a sole proprietorship business there is no legal difference between the owner and the business. Sole Proprietorship firm is the simplest form of business entity in India which is owned and managed by a single person. It is the easiest way of registering and starting a business. It is not governed by any law and hence it is the easiest form of business in India. All the decisions and management of the business is in the hands of one person.

Who can be called as Sole Proprietor?

A sole proprietor is the owner of the sole proprietorship, he is recognized as an entity same as that of business. As the sole proprietor is the owner of the business he is entitled to all the company's revenue. It is completely under the control of the proprietor. Hence, he/she makes the decisions for the company.

To run a business as a sole proprietor some licenses and permits are required. The license will depend on the industry, state, and locality.

Proprietorship in India is a type of unregistered business entity that is owned, managed, and controlled by one person. The micro and small businesses that are operating in the unorganized sector prefer registering as a proprietorship in India. It is very easy to start a sole proprietorship in India as it has very few regulatory compliance for conducting businesses. Proprietorship registration is ideal for the entrepreneurs who are getting into the business for small businesses with very few clients. The liability of the sole proprietorship is limited and they also do not have perpetual existence.

Documents Required for Sole Proprietorship Registration in India

Documents you will get after proprietorship registration:

Post incorporation of your sole proprietorship firm, you'll receive the following documents:

• GST Registration Certificate
• Shop and Establishment Act License
• MSME Certificate

Fee for the Sole Proprietorship Firm Registration:

The total fees for registration of Sole Proprietorship Firm in India is ₹1,999 including government and professional fees. The main cost is mandatory registrations for existence of proprietorship firm like GST registration, MSME registration, etc.

Time Required for proprietorship registration: On average, it takes around 7-10 working days for registration of sole proprietorship firm in India subject to document verification by the concerned authorities.

Types of Registration Required for Sole Proprietorship Firm

• GST Registration
• MSME Registration
• Shop and Establishment Act License

Sole Proprietorship Firm Registration Process

GST Registration

Depending upon the requirement of the business and GST Law, application for GST registration has to be made with the department. GST registration usually takes around 5-10 working days.

MSME Registration

To establish the existence of your proprietorship firm and avail various benefits, you'll have to file an application for registering your firm as Small and Medium Enterprise (SME) under the MSME Act. It is beneficial for the business at the time of taking out a loan. The government runs various schemes for SMEs to provide loans at low-interest rates.

Shop and Establishment Act License

You are required to obtain a shop and establishment license according to the local laws. It is issued by the municipal corporation on the basis of the number of employees or workers in the firm.

Bank Account Opening

Once all the steps are completed, the current bank account should be opened by the proprietorship firm. You can contact us for assistance with your current bank account opening.

How to Register as a Sole Proprietorship in India?

Starting a sole proprietorship in India is easy if all the compliances are properly met.

• Decide on the suitable business name.
• A suitable business location designated as the place of doing business should be selected.

Shops and Establishment Registration

The Shop and establishment license covers all the business entities such as the shops, restaurants, commercial establishments, the retail trade/business, profit-making organizations, public amusements, and so on. Irrespective of any business establishment whether fully functional or not it is necessary to get the business registered. The local municipal corporation issues this license and it depends on the number of employees in an establishment.

GST Registration

GST has replaced many indirect taxes such as the service tax, Value added tax, Central sales tax, excise duties, additional customs duties, and so on. An individual making the interstate supply of goods and services and having an annual turnover of over Rs.40 lakh is required to get GST registration. Getting a GST registration makes the business legally recognized as the supplier of services or goods. Small businesses can also opt for the composition scheme to lower the tax rates, which has reduced the taxation and the compliance burden significantly. For certain businesses getting a GST registration is mandatory. According to the GST Act, penalties are applicable if a business is operating without a GST registration.

UdyogAadhar Registration

UdyogAadhar Registration is provided to the Micro, small, and medium-sized businesses in India under the Micro, small, and medium enterprise development Act, 2006. Earlier recognized as MSME registration, the process of obtaining the UdyogAadhar registration is completely online. The major objectives of the UdyogAadhar registrations are as follows:

• To enable the micro, small and medium enterprises to compete with the international competition efficiently.
• To promote the growth of micro, small and medium enterprises on a large scale to tackle the problems related to unemployment and poverty effectively.
• To extend the benefits of various government schemes at one stop to the SSI units.
• To safeguard the small-scale industries from financial harassment in the hands of the big industries.

TAN Registration

TAN or the Tax Deduction Collection Number is a mandatory ten-digit number required for all persons who are supposed to pay the Tax deduction at source or TDS on behalf of the Government. The person deducting the tax at the source must deposit the deducted tax to the central Government to quote the TAN number. Salaried individuals are not required to obtain TAN or deduct tax at the source. A proprietorship business and other entities must deduct tax at the source, making certain payments like salary, payments to the contractor or the subcontractors, amount of rent exceeding 1,80,000 per year, etc. On deducting the TDS, the entity with TAN registration will issue a TDS certificate as proof of collection of tax.

FSSAI Registration

FSSAI registration should be obtained from the Food Safety and Standard Authority of India in the proprietor's name if he is involved in the selling of food products or handling of the food products.

Documents required for FSSAI registration:

• Photo of the food business operator
• Document for Identity proof like Ration card, Voter ID card, Pan Card, Driving License, Passport, Aadhar Card, Senior Citizen Card, Department Issued ID.

Supporting Documents (if any): NOC by the Municipality or the Panchayat, Health NOC.

Trademark Registration

Trademark Registration is required in case you wish to trade your goods or services with a special name or brand. It is profitable where there is a threat of some misuse of the name or mark used in your business.

Benefits of Proprietorship Firm Registration

• Minimal Compliances: A proprietorship firm has very minimal compliance requirements which make it much more preferable option than One Person Company.
• Easy to Start: Sole Proprietorship is not governed by any law and does not require any mandatory registration. Hence, it is the easiest way of starting a business entity.
• Lower Cost: As there are minimal compliance, there is no need to hire an auditor for meeting the legal compliance requirements.
• Complete Control: As a proprietorship firm is owned by a single person, he has the complete control over the business decisions and there are no interventions of any kind.
• No Sharing of Earned Profits: The sole proprietor is the only person who manages and operates the whole business, which means that 100% of the profits belong to only him/her.
• Minimum Legal Compliances: Sole Proprietorships are not administered by any specific law; therefore the legal compliances are automatically minimal by its nature. They do not need to avail the Certificate of Incorporation or Registration Certificate from the concerned authority.
• Minimum Income Tax: No separate tax is needed to be paid because the Sole Proprietorship involves only a Sole proprietor. The sole proprietor is needed to file his/her IT returns, showing the profits earned in the business. Tax is calculated at income tax slab rates applicable to an individual.
• Information Remains in Private Hands: Unlike Limited Liability Partnerships and Companies, the financial reports of Sole Proprietorship remain in private hands and are not made public via MCA portal.
• Own Decision Making: There is no chance of conflict of ideas since the Sole Proprietorship is managed and operated single-handedly. The Sole Proprietor has the sole right to make all business decisions.
• No Requirement for Audit: Sole Proprietorship is not obligatory to get its accounts audited every financial year, though this may depend upon the nature of business and threshold turnover limits.

Why Choose Legal Tax for Sole Proprietorship Registration?

• Legal tax provides a very smooth process of registration without any complications.
• Their service is by far the best and affordable as compared to other service providers.
• The cost of Sole proprietorship registration is just Rs. 1999/-.
• They have a well experienced team of experts that provide the best solutions for your proprietorship registration and guide you at every step.

FAQ's

Q1. Who can begin with a sole proprietorship type of business?

Any citizen of India can start a sole proprietorship. All you need is a current bank account in the name of your business. Registration requirements depend on the kind of business you want to start.

Q2. How much time does it take to establish a proprietorship?

It usually takes around 15 days. This is one of the reasons it is a popular type of business among merchants and traders.

Q3. How much does Legal Tax charge for sole proprietorship registration?

Legal tax charges just Rs. 999/-.

Q4. Why choose Legal Tax over other service providers for sole proprietorship registration?

• Legal tax provides a very smooth process of registration without any complications.
• Their service is by far the best and affordable as compared to other service providers.
• The cost of Sole proprietorship registration is just Rs. 1999/-.
• They have a well experienced team of experts that provide the best solutions and guide you at every step.

Q5. What are the benefits of sole proprietorship registration?

• Minimal Compliances: Very minimal compliance requirements compared to One Person Company.
• Easy to Start: Not governed by any law and does not require mandatory registration.
• Lower Cost: No need to hire an auditor for legal compliance requirements.
• Complete Control: Single owner has complete control over all business decisions.
• No Sharing of Earned Profits: 100% of profits belong to the sole proprietor.
• Minimum Legal Compliances: No obligation to upload Annual reports on the Ministry of Corporate Affairs website.
• Minimum Income Tax: Tax calculated at individual income tax slab rates; no separate return required.
• Information Remains in Private Hands: Financial reports not made public unlike LLPs and Companies.
• Own Decision Making: No conflict of ideas as the business is managed single-handedly.
• No Requirement for Audit: Not obligatory to get accounts audited every financial year.

Q6. What documents are needed to open a current account in the name of my proprietorship?

Most banks ask for a registration under the Shops and Establishment Act. Other than this, you need a PAN card, proof of your company's existence, and address and identity proofs.

Q7. What kind of business can be a sole proprietorship?

Businesses like grocery stores, manufacturing businesses, small traders and fast food vendors are most common sole proprietorships. Although bigger businesses can be sole proprietorships, it is not recommended as it would be hard to manage alone.

Q8. Apart from a current account, what other registrations are required?

This depends on the type of business. If you run an air-conditioned restaurant, you would need a Service Tax Registration and VAT Registration. If you have a grocery store, VAT Registration is needed once your business turnover exceeds Rs. 5 lakh.

Q9. Who can start a sole proprietorship firm?

Any Indian citizen can start a Sole Proprietorship Firm in India. They only need to open a current bank account in the name of the business, and obtain other required licenses as stated above.

Q10. Who is liable for the business in a sole proprietorship?

The proprietor personally is liable for the profits and losses of the business in a Sole Proprietorship.

Q11. Can I convert my sole proprietorship firm to a Private Limited Company?

Yes, you can choose to change the form of your entity anytime as per government regulations.

Q12. For whom is the Sole Proprietorship the ideal business model?

Sole Proprietorship Firm is best suited for unorganized and small businesses due to the ease of incorporation and minimal compliance requirements.

Q13. Can I register my sole proprietorship firm under the Government of India?

Yes, you can. A CA/CS/Expert will guide you on how to register under the Government of India and the type of licenses required for your business to function smoothly.

Q14. Who can be called as a Sole Proprietor?

A sole proprietor is the owner of the sole proprietorship, recognized as an entity same as that of the business. As the owner, he/she is entitled to all the company's revenue and makes all decisions for the company. To run a business as a sole proprietor, some licenses and permits are required depending on the industry, state, and locality.

Q15. How long does the sole proprietorship exist?

The sole proprietorship exists as long as the proprietor is alive and desires to run the business.

Q16. Is there any minimum requirement to start a sole proprietorship in India?

No, there is no minimum requirement to start a sole proprietorship in India.

Q17. Do I need a GST number as a sole proprietor?

Yes, one needs to obtain GST registration in order to establish the existence of the proprietorship firm.

Q18. Why is sole proprietorship best?

Sole proprietorship businesses typically require less paperwork and are easier to maintain than partnerships or corporations. The accounting and record keeping methods are usually simple and straightforward, and the business owner is responsible only for the debts and liabilities.

Q19. How do you raise capital for a sole proprietorship?

A sole proprietor can raise capital by taking out loans to support the business. This business entity is not registered as an independent business but is operated under the name and personal responsibility of the owner.

Q20. Is there any Certificate of Incorporation?

No, there is no Certificate of Incorporation given.