Book an appointment

Annual return GSTR-9 and GSTR-9C, under section 44 of CGST Act, due date stands extended for financial year 2019-20 from 3:

Proprietorship Firm Registration in India - Overview

A Sole Proprietorship Firm as the name suggests requires a single person to start a proprietorship business. Sole proprietorship is a unrecognized business entity that is formed, managed and owned solely by a single person. The Sole Proprietorship Firm Registration in India is very easy and convenient as it has very few regulatory compliances for conducting business. This type of business is suitable for the entrepreneurs who are getting into business and the investment is low. Although it has a few drawbacks such as unlimited liability, no legal entity and no perpetual existence. To run a business as a sole proprietor some licenses and permits are needed. The license required will depend on the industry, state, and locality.

Track Your Status

Nidhi Company Registration Package

Rs.2,800/-+18% GST

  • What we provide
  • Documents required
  • Drafting of Deed
  • PAN Card Registration
  • MSME Registration
  • Name of the Firm
  • Object of the Firm
  • Aadhaar card of Proprietor
  • Any Special Terms & Conditions
  • % of Share Distribution
  • Monthly Remuneration
  • Address Proof of the Registered Office (Rent Agreement, Receipt, Electrical Bill, Owner Property tax)
  • Passport size photos of Proprietor
  • Email and Mobile Number of the Partners

We have more than 200+
branches in

To know the branch nearest to your place

Advantages of Sole Proprietorship

Less Regulatory Compliances
The sole proprietorship business can be solely started easily. There is minimum compliances to be adhered for its registration. Sole proprietorship business is economical as it is relatively less expensive to start than a company or LLP.

Control of The Business
The sole proprietor has the complete control over the business. He will look after all the aspects of the business. Since only one person is running the business, secrecy can be maintained and running the business with be less complex.

Quick Decision Making
The sole proprietor takes all decisions of the business. It makes the decision making process much quicker and efficient. The person doesn't need to take otgers' approval or consult them.

Disadvantages of Sole Proprietorship

Unlimited Liability
This is possibly the biggest disadvantage of sole proprietorship. It comes with unlimited liability. The sole member is personally liable for all the transactions. If any loss occurs, he will have to bear the whole loss out of his personal assets.

No Perpetual Succession
There is no perpetual succession which means it can come to an end if anything happens to the sole proprietor. It can dissolve, terminate upon disability or death of the owner. This makes the business unreliable and uncertain.

Difficult to Raise Funds
Since a single person manages the business, it is a difficult task to raise capital. The investment made into the business is by the owner himself. The sole proprietorship firm has no separate legal entity status from its owner. As it can come to an end at any time and there is no separate legal entity, it is difficult to secure funds from third parties.

Process of Sole Proprietorship Registration in India

The Sole Proprietorship Registration process is simple and easy.

Step 1:
Apply for PAN card- After obtaining a PAN card, or if the proprietor already has a PAN card, the next step is to choose a name for the sole proprietorship business.

Step 2:
The next step is to open a bank account in the name of the business. All the transactions of the business will be done through this bank account. Though no specific regulations is required for starting a sole proprietorship firm, certain basic registrations are required to be obtained by a sole proprietorship firm for doing business. They are as follows :

  • The proprietor needs to obtain the Registration Certificate under the Shops and Establishment Act of the state in which the business is to be formed.
  • The sole proprietorship should register for GST if the business turnover exceeds Rs.20 lakh.
  • The sole proprietorship can also register as a Small and Medium Enterprise (SME) under MSME Act. Although it is not mandatory but it will offer benefits.

Documents Required for Sole Proprietorship Firm Registration

The documents required for registration of Sole Proprietorship are-

  • GST Registration Certificate
  • IEC Certificate
  • Licenses granted by medical authorities, pharmaceutical and other authorities to carry out the business.
  • FSSAI Registration and License Certificate
  • Utility Bills
  • Registered Office Address
  • Rental Documents- NOC (no objection certificate) in case leased
  • PAN- Permanent Account Number
  • Address Proof of owner
  • Bank Account information
  • Aadhar Card

Timeline for Proprietorship Firm Registration in India

The Sole Proprietorship business requires opening a bank account in the name of the business, a Certificate of Registration under the Shop and Establishment Act of the respective state and GST Registration. The registration process takes approximately 15 to 20 days, subject to departmental approval and reverts from the respective department.

Proprietorship Firm Registration Fees

Proprietorship Firm Registration Fees ranges from Rs. 3500 to Rs 10,000. This amount varies and depends on a number of factors like the state of incorporation, capital investment, cess and charges of different governmental bodies for the process of Registration.

Why Choose TAX SEVA KEDNA- Online Proprietorship Firm Registration Consultant in India

At TAX SEVA KENDRA, We provide high quality service for Proprietorship Firm Registration online. You get access to reliable and experienced professionals and can coordinate with them to fulfill all your legal requirements. You can also track the progress on our online platform, at all times.

By handling all the paperwork and other requirements, we ensure a seamless interactive process with the government. We ensure 100% transparency in our activities.

We own a team of experienced business advisors and legal professionals to give you all the assistance you need.

FAQ on Proprietorship Firm Registration

Who is a sole trader and a sole proprietor?

Both the words sole trader and sole proprietor will include an individual to carry out the affairs of the sole proprietorship business.

Are there any form of disadvantages of running a sole proprietorship business?

Yes, the main disadvantage is the unlimited liability that comes as a huge burden over the sole proprietor.

Is it mandatory for a sole proprietor business to be registered?

No, it is not mandatory for the sole proprietorship firm to get registered. However, during financing, banks may insist sole proprietor businesses to get registered.

When would GST registration be applicable for a proprietorship firm?

Only when the business reaches a particular extent then GST registration would be required for the sole proprietorship business. This is as follows :

  • Rs. 20 Lakh- for service oriented business
  • Rs. 40 Lakh- for trading business.

Can a sole proprietor hires employees?

Yes, a sole proprietor can recruit employees. Small scale businesses and MSMEs hire labourers and employees to help in the daily functions.

Can FDI be allowed in a Proprietorship firm?

Yes, Foreign Direct Investment is allowed. However, there are specific conditions which have to be adhered for receiving foreign direct investment under sole proprietorship registration.

Are there any compliance required post- sole proprietorship registration?

Yes, the following compliances are required post- sole proprietorship registration

  • GST Registration
  • Financial Documents
  • Income Tax Returns
  • Any registrations required to be carried out under respective authorities.

Can a sole proprietorship be converted to a limited company?

Yes, a sole proprietorship can be converted to a company. There are regulations, criteria and compliances that are required to be fulfilled for such conversion.

Can the name be changed for a sole proprietorship firm?

Yes, the name can be changed. The change of name has to be intimated to the public through public and government notices. Apart from this the sole proprietor has to inform all the respective parties for the change of name.

What businesses are commonly run as Sole Proprietorships?

Most local businesses are run as sole proprietorships, from grocery shops to fast-food vendors, and even small traders and manufacturers. Even jewellery shops are sole proprietorships.

Who can start a Sole Proprietorship Firm?

Any Indian citizen with a current account in the name of his/her business can start a sole proprietorship. Registration may or may not be required, depending on the type of business. However, banks may require shops & establishment registration to open a current account in the name of the business.

Need Consultancy? Ask Tax Seva Kendra Expert@ Rs. FREE

  • Free Consultancy
  • Online Documentation
  • Anywhere In India
FAQ
Q.What is a Proprietorship?

A. Any sole trading business owned and run by an Indian citizen is called Proprietorship Firm. Here owner and business identity are treated same as per Indian law. Proprietor is personally responsible for all business liabilities.

 

Q. Who can incorporate sole proprietorship firm?

A. Any Indian citizen having PAN number and current account can apply for registration of proprietorship firm. Though registration depends on nature of your business but Shop & Establishment registration is must.

Q. Types of business you can run as sole Proprietorship?

A. Basically local business like grocery store, milk store, stationery store, fast food store, jewellery store and many more small store and business are generally operating under proprietorship. .

Q. How much time is required to form sole proprietorship?

A. If all documents are submitted correctly and timely then generally it will take not more than 15 days to form. Due to simplicity and less documentation, proprietorship registration is very popular among small business incorporators.

Q. Does sole trader also requires TAN registration?

A. As per Income Tax rules if you are liable to deduct TDS then you must obtain TAN number before filing the TDS return. You can also ask our executives regarding your TAN queries.

Q. Does proprietorship registration can be applied online?

A. Yes, you can apply for proprietorship registration online through us. Submit the required documents to us as per guideline; we will initiate the process on behalf of you.