Sole Proprietorship Firm

A Sole Proprietorship form of business organisation is where a business is managed by a single person. Generally, it does not require any registration as such. Any individual who wants to start a business with less investment can choose this type of business form.

What is a Sole Proprietorship Firm?

A sole proprietorship firm means a type of business entity that is owned, controlled and managed by a single person. The owner of the Business is called Sole Proprietor of the Firm. As the business is run by a natural person, there is no legal difference between the promoter and the business. The promoter himself receives all the profits. Sole Proprietorship firm does not require any formal registration.

 

The key feature of sole proprietorship firm is that it is very easy to start as there are less legal formalities and lesser formation costs involved.

Government Fees / Cost for Sole Proprietorship registration:

  • The government of India has not prescribed any sole proprietorship firm rules and regulation in India or there is no registration mechanism for Sole Proprietorship Firm registration.

  • Thus, the registration of a proprietorship can only be recognized through tax registrations that the business is required to have as per the rules and regulations.

  • These tax registrations may include GST Registration and/or SSI/MSME / Udyam Aadhar Registration that should be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a sole proprietorship.

Price and Plan

Price may varies for different states in India
ESSENTIAL
₹ 4,999/-
(All Inclusive)
  • GST Registration / MSME Registration

  • Shop and Establishment Registration

ENHANCED
₹ 6,999/-
(All Inclusive)
  • SSI/MSME Registration

  • GST Registration

  • Shop and Establishment Registration

ULTIMATE
₹ 13,999/-
(All Inclusive)
  • SSI/MSME Registration

  • GST Registration

  • Shop and Establishment Registration

  • Trademark (1 application 1 class) (start ups, proprietorship & small business)

Compliance required for Sole Proprietorship Firm

GST Registration

GST registration is one of the ways to get a proprietorship registration done. You can get yourself registered under GST if your annual turnover is more than Rs. 40 lakhs. Also, if you are doing online business (selling through amazon, flipkart etc.), you are required to get a GST number under goods and service tax Act.

GST Return

The proprietorship firms registered under GST are required to file the GST return on a monthly, quarterly and annual basis. GST return is a document that contains the details of the income of the taxpayer. As filing of GST returns is mandatory for all the registered Taxpayers including Partnership firms.

MSME registration

You can get yourself registered as Small and Medium Enterprise (SME) under the MSME Act. The application can be filed electronically. Although it isn’t compulsory to register as an SME, it is highly beneficial, especially at the time of taking loan for the business. Also getting Udyam Aadhar Registration will be very beneficial.

Accounting

The accounting for a sole proprietorship does not require a separate set of accounting records, since the owner is considered to be inseparable from the business. Nonetheless, it is always advisable to maintain records for business activities of a Proprietorship firm, in order to judge whether these operations are generating a profit.

IT Return

Income tax filing must be filed by all proprietorship having a taxable income over the exemption threshold. In some cases, a tax audit would also be required. Since proprietorship is considered to be one and same as the proprietor, the income tax return filing procedure for a proprietorship is similar to individual income tax return filing.

Tax Audit

There is no obligation for a sole proprietor under any law to get the accounts except in case where the turnover of a proprietary business in any financial year exceeds 1 Crores Rupees and gross receipt from profession exceeds 50 Lakhs Rupees. In both cases, the audit of accounts is compulsory for a proprietor under the Income Tax Act.

Documents Required for Sole Proprietorship Firm

Quick Checklist

  • Photograph

  • PAN Card

  • Adhaar Card

  • Electricity Bill

Specific Requirements

  • A Company must have a registered office in India. Documents like bank statement or electricity bill should not be older than 2 months. Along with that utility bill, rent agreement or sale deed and a No Objection Letter (NOC) from the landlord with his/her consent to use the office as a registered office of a company must be submitted.

How to Incorporate Sole Proprietorship Firm

  1. Complete a Checklist

  2. Submit documents

  3. Verification of Documents

  4. Obtain Registration Certificate

  5. Obtain PAN and TAN