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Sole Proprietorship

What is a sole proprietorship?

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 compliances 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 proprietorships is limited and they also do not have perpetual existence.

Who is a sole proprietor?

A sole proprietor is the owner of the sole proprietorship, he is recognized as an entity same as the business. As the sole proprietor is the owner of the business he is entitled to all the company's revenue. The sole proprietorship is completely under the control of the proprietor. Hence, he 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.

Documents required for sole proprietorship registration in India

What documents are required to register a sole proprietorship in India?

The process of proprietorship registration in India can be done online. All you need to do is submit the following documents:

  • Identity Proof of the applicant - Aadhar and the PAN Card.
  • Address Proof of the applicant - Latest Bank Statement
  • Passport size photos.

IndiaFilings can help you in obtaining a sole proprietorship in India in just 5-7 working days.

Procedure for obtaining proprietorship registration

How can IndiaFilings help you in obtaining proprietorship registration in India?

The process of registering for a Proprietorship in India is completely online. There is no need to submit the documents manually. IndiaFilings has helped thousands of entrepreneurs to obtain proprietorship registrations in India.

  • Once we receive a request our incorporation expert gets in touch with you and briefs you on the whole process. The expert will also guide you about the documents that are required to be submitted.
  • Once the documents are submitted and the payment is initiated the process of registration begins.
  • A relationship manager is assigned in the process who will guide you at every step.
  • We can help you in obtaining the proprietorship registration in India within 8-10 days subject to the document submission.

How to register 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 s GST registration is mandatory. According to the GST Act, penalties are applicable if a business is operating without ba GST registration.

Udyog Aadhar Registration

Udyog Aadhar 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 Udyog Aadhar registration is completely online. The major objectives of the Udyog Aadhar 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. Click Here know more about the people who need FSSAI registration.

Here is a list of documents required for FSSAI registration:

  • Photo of the food business operator
  • Document for Identity proof like Ration card, the 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.

Checklist for obtaining Sole proprietorship registration

  • A certificate is issued by the municipal authorities under the shop and the establishment Act.
  • A license that is issued by the registering authorities like the Certificate of Practice that is issued by the Institute of Chartered Accountants of India.
  • The registration or the licensing document is issued in the name of the proprietary concern by the central government or the state government authority or the department.
  • The complete tax return in the name of the sole proprietor where the firm's income is reflected duly authenticated and acknowledged by the Income Tax Authorities,
  • The utility bills such as electricity, water, and the landline telephone bills in the name of the proprietary concern.
  • Issue of the GST registration or the certificate.
Advantages

What are the benefits of registering as a proprietorship firm?

There are various reasons why one should register as a proprietorship firm. Here are some of them:

  • Complete Control- Proprietorships firms are owned and operated by just one person. The owner has full authority and can make all the decisions as no partners are involved to consult.
  • Easy Setup- As no registrations are required to start, a proprietorship can create and receive payments from clients very easily
  • Easy Compliance- The significant advantage of the Proprietorship is that it doesn't require any additional compliance in most cases.
    The PAN of the Proprietor and Proprietorship are the same.
    Hence, in most cases, only income tax returns in the form of ITR3 must be filed every year.
  • Dissolution- If an individual has to cease operation, he does not have to wind up the company significantly. This undoubtedly saves time.
  • Requires less investment- Registering a proprietorship in India requires very little investment. Hence, anyone who wants to start a business with low funds can go for proprietorships as no investments are involved.
  • Information is not disclosed in public- The Proprietorship firms' financial reports are public like that of the LLPs, where the financial statements are made public.

Post Incorporation compliances for the sole proprietorships

What are the post-incorporation compliances for the sole proprietorship firms?

The proprietorships registered in India are required to file income tax returns. As the proprietors and the proprietorships are the same the income tax return filing for the proprietor and proprietorship is the same.

Under the Income-tax Act, all the proprietors below the age of 60 will file ITR only if the total income exceeds Rs. 2.5 lakhs. If the proprietor is over 60 years and below 80 years, he should file ITR only if his income exceeds Rs. 3 lakh. Proprietors over the age of 80 years are required to file income tax if the income exceeds Rs. 5 lakh.

At IndiaFilings we offer expertise in Income tax return filings for several small and medium-sized proprietorship firms across the country. Get in touch with an IndiaFilings Tax Expert to file the Income-tax return for your Proprietorship today.

Audit for Proprietorship

An audit is required for the proprietorship firms if the total sales are over Rs. 1 crore during the financial year.

In a professional case, an audit is necessary if the total gross receipts are more than Rs.50 lakhs during the financial year assessment.

Also, an audit is required for any proprietorship firm under a presumptive taxation scheme irrespective of turnover if the income claimed is lower than the deemed profits and gains under the scheme.

Audit for Proprietorship for income tax purposes must be conducted by a practicing Chartered Accountant.

ITR for Proprietorship Firms

Proprietorship firms are required to file Form ITR-3 or Form ITR-4-Sugam.

Form ITR-3

Form ITR-3 can be filed by a proprietor or a Hindu Undivided Family carrying out a proprietary business or profession.

Form ITR-4-Sugam

Form ITR-4-Sugam can be filed by a proprietor who would like to pay income tax under the presumptive taxation scheme. A presumptive taxation scheme is designed to help ease the compliance burden of small businesses by assuming a set profit margin on the business or profession's total income.

Filing a Proprietorship Firm Tax Return

The income tax return of a proprietorship firm in ITR 3 or ITR V Sugam can be filed online using the proprietor's digital signature or manually.

Frequently Asked Questions

What is a Sole proprietorship?

Proprietorships in India are a type of unregistered business entity that is owned, managed, and controlled by one person. The micro and the small businesses that are operating in the unorganized sector prefer getting registered as Sole proprietorships.

Who can get sole proprietorship registration?

An Indian Citizen with a current account in the name of his/her business can get a sole proprietorship registration.

How long it takes to register a Sole proprietorship in India?

It takes around 8 to 10 days but is subject to government processing and document submission.

Is there any Certificate of Incorporation?

No, there is no certificate of Incorporation given.

Are there any compliances for the sole proprietorship?

As the sole proprietorship and the proprietor are the same the individual has to just file the Income-tax returns and GST returns filing for the proprietorship firm.

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.

How long does the Sole proprietorship exist?

The sole proprietorships exist as long as the proprietor is alive and is desiring to run the business.

Is the owner of the proprietorship considered to be the same as the sole proprietor?

Yes, a sole proprietor is considered to be the same as the sole proprietor.

What are licenses required for proprietorship registration?

It generally differs from state to state as in Maharashtra a Shop and Act license is required and for West Bengal, the trade license is required.

What is the role of the proprietor in the sole proprietorship?

The proprietor owns, controls, and manages the sole proprietorships. He has a complete hold over the proprietorship.

Proprietorship Registration in State

Proprietorship Registration in City

Proprietorship Registration In Mumbai

Proprietorship Registration In Bangalore

Proprietorship Registration In Chennai

Proprietorship Registration In Ahmedabad

Proprietorship Registration In Pune

Proprietorship Registration In Agra

Proprietorship Registration In Ajmer

Proprietorship Registration In Aligarh

Proprietorship Registration In Amravati

Proprietorship Registration In Amritsar

Proprietorship Registration In Asansol

Proprietorship Registration In Aurangabad

Proprietorship Registration In Bareilly

Proprietorship Registration In Belgaum

Proprietorship Registration In Bhavnagar

Proprietorship Registration In Bhiwandi

Proprietorship Registration In Bhopal

Proprietorship Registration In Bhubaneswar

Proprietorship Registration In Bikaner

Proprietorship Registration In Chandigarh City

Proprietorship Registration In Nagpur

Proprietorship Registration In Cuttack

Proprietorship Registration In Dehradun

Proprietorship Registration In Dhanbad

Proprietorship Registration In Bhilai

Proprietorship Registration In Durgapur

Proprietorship Registration In Erode

Proprietorship Registration In Faridabad

Proprietorship Registration In Firozabad

Proprietorship Registration In Ghaziabad

Proprietorship Registration In Gorakhpur

Proprietorship Registration In Gulbarga

Proprietorship Registration In Guntur

Proprietorship Registration In Gwalior

Proprietorship Registration In Gurgaon

Proprietorship Registration In Guwahati

Proprietorship Registration In Indore

Proprietorship Registration In Jabalpur

Proprietorship Registration In Jaipur

Proprietorship Registration In Jalandhar

Proprietorship Registration In Jammu

Proprietorship Registration In Jamnagar

Proprietorship Registration In Jamshedpur

Proprietorship Registration In Jhansi

Proprietorship Registration In Jodhpur

Proprietorship Registration In Kakinada

Proprietorship Registration In Kannur

Proprietorship Registration In Kanpur

Proprietorship Registration In Kochi

Proprietorship Registration In Kottayam

Proprietorship Registration In Kolhapur

Proprietorship Registration In Kollam

Proprietorship Registration In Kota

Proprietorship Registration In Kozhikode

Proprietorship Registration In Kurnool

Proprietorship Registration In Ludhiana

Proprietorship Registration In New Delhi

Proprietorship Registration In Hyderabad

Proprietorship Registration In Kolkata

Proprietorship Registration In Lucknow

Proprietorship Registration In Madurai

Proprietorship Registration In Malappuram

Proprietorship Registration In Mathura

Proprietorship Registration In Goa City

Proprietorship Registration In Mangalore

Proprietorship Registration In Meerut

Proprietorship Registration In Moradabad

Proprietorship Registration In Mysore

Proprietorship Registration In Nanded

Proprietorship Registration In Nashik

Proprietorship Registration In Nellore

Proprietorship Registration In Noida

Proprietorship Registration In Palakkad

Proprietorship Registration In Patna

Proprietorship Registration In Pondicherry

Proprietorship Registration In Allahabad

Proprietorship Registration In Raipur

Proprietorship Registration In Rajkot

Proprietorship Registration In Rajahmundry

Proprietorship Registration In Ranchi

Proprietorship Registration In Salem

Proprietorship Registration In Sangli

Proprietorship Registration In Siliguri

Proprietorship Registration In Solapur

Proprietorship Registration In Srinagar

Proprietorship Registration In Thiruvananthapuram

Proprietorship Registration In Thrissur

Proprietorship Registration In Tiruchirappalli

Proprietorship Registration In Tirupati

Proprietorship Registration In Tirunelveli

Proprietorship Registration In Tiruppur

Proprietorship Registration In Tiruvannamalai

Proprietorship Registration In Ujjain

Proprietorship Registration In Vadodara

Proprietorship Registration In Varanasi

Proprietorship Registration In Vijayawada

Proprietorship Registration In Vellore

Proprietorship Registration In Warangal

Proprietorship Registration In Bilaspur

Proprietorship Registration In Perinthalmanna

Proprietorship Registration In Purulia

Proprietorship Registration In Shimla

Proprietorship Registration In Tirur

Proprietorship Registration In Surat

Proprietorship Registration In Visakhapatnam

Proprietorship Registration In Gandhinagar

Proprietorship Registration In Coimbatore

Proprietorship Registration In Trichy

Proprietorship Registration In Anand

Proprietorship Registration In Patiala

Proprietorship Registration In Roorkee

Proprietorship Registration In Etawah

Last updated: Nov 16, 2021

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