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Sole Proprietorship Registration

Registration of Sole Proprietorship Business. Benefits, Necessary documents, Procedure for Registration and Legal Compliances of Sole Proprietorship in India.


What is a Sole Proprietorship Business?

A sole proprietorship is a type of an unincorporated entity that is owned by one individual only. It is the simplest legal form of a business entity. A sole proprietor is someone who owns an unincorporated business by himself or herself. One of the functional advantages of sole proprietorships is that they are easier to set up than other business entities. A person becomes a sole proprietor simply by running a business. Another functional advantage of a sole proprietorship is that the owner maintains full control and ownership of the business. There is no limit on the number of employees that a sole proprietor can employ. Advantages of Sole proprietorship Business includes less Paperwork, Easier Tax Setup, Fewer Business Fees, Straightforward Banking, Simplified Business Ownership etc. The Process of registering sole proprietorship business, documents required and statutory compliances are explained below:



Benefits of Sole Proprietorship Business

- The Proprietorship firm does not need any compulsory registration

- It is easy to start a new business without engaging in any formalities

- It has a minimum compliance requirement

- It does not require any audited statements with MCA each year

- The proprietorship with less income than taxable limit is not liable to pay income tax

- A single person can start a business of proprietorship

- There is a low capital requirement as it depends upon the owner and his will


Steps to Register a Sole Proprietorship

A Sole Proprietorship do not require any specific Registration. During Court of business they can register with:

1. Register under Shop and Establishments Act

2. MSME Registration

3. Register with GST Department


Other Applications / Registrations according to nature of Business

- Apply for License/ Certificate from Municipal Authorities

- Income tax returns documents

- Professional Tax authorities

- Certificate issued by Food and Drug Control Authorities

- Certificate of Indian Medical Council

- Apply for IEC (Importer Exporter Code) from DGFT to the Proprietor

- Apply for utilities such as water, electricity, telephone in the name of Proprietor


Documents Required to Register a Sole Proprietorship

To Register a Sole Proprietorship the following documents are necessary:

- Aadhar Card of Proprietor

- PAN card of Proprietor

- Bank Account details of Proprietor

- Registered Address Proof


Mandatory statutory Compliances of a Sole Proprietorship

- TDS Return Filing

- Filing Income Tax Return

- GST Compliances

- Drafting of Financial Statements

- Tax Audit Compliance

- Documentation of invoices of sales and purchases


Other Information

A minor below 18 years cannot start a sole proprietorship business

A Sole Proprietorship can appoint employees as per requirement

Amount drawn by Sole proprietor will not be treated as salary, but as drawing

Profit from sole proprietorship business should be added to the income of proprietor

The Sole proprietorship business can be sold to anyone

Income of Proprietorship will be added with Income of Proprietor for Income tax return

Sole proprietorship business can windup, when the proprietor want to stop business

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