Sole Proprietorship Firm Registration

What is a Sole Proprietorship Firm?

In India, it's typical for businesses to start with a single individual, who becomes the sole proprietor of the Proprietorship Firm. This structure does not differentiate between the individual and the business entity. Despite this, many entrepreneurs opt for this structure during the initial stages of their business due to its advantages in terms of lower tax rates, flexibility, and other benefits. As more partners join a business, control over operations may decrease. Hence, many proprietors choose to operate their businesses independently and register as a sole proprietorship firm. Although there is no specific regulation for this type of organization, there are various ways to register a Sole Proprietorship firm. Small businesses seeking to minimize risks often prefer this structure.


Benefits of Proprietorship Firm Registration

You Are Your Own Boss

In a sole proprietorship, the proprietor enjoys full autonomy in decision-making and operations, without any need to report to or take orders from external parties. This structure is shielded from third-party intervention. Moreover, there are minimal compliance and disclosure obligations throughout the fiscal year compared to a corporate firm, leading to reduced government involvement.

Easy To Establish

Setting up and registering a sole proprietorship business is a straightforward process. No specific procedures need to be followed, and the registration cost is significantly lower than other business structures. The business operates under the proprietor's identity and can run any legal business under their name or a different legal name as a brand.

You Own Whole Share Of Profit

In a sole proprietorship, the proprietor possesses complete ownership of the business profits and assets, which are treated as the proprietor's personal assets. The proprietor has the liberty to choose to withdraw profits or keep them as reserves.

Tax Benefits

For income tax purposes, a proprietorship business is not considered a separate entity. The tax bracket assigned to an individual's income is applied to the business income. The tax rates are comparatively lower than other business structures such as companies and partnerships. Additionally, combining the individual and business income tax returns provides the benefit of deductions, making it an advantageous structure.


Documents required for registration of Proprietorship Firm


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PAN Card

A self-attested copy of PAN Card of proprietor

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Aadhar Card

Self- attested copy of Aadhar Card of proprietor

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Bank Details

Details of the saving or current account of bank


Establish Proprietorship in 3 Easy Steps

1. Answer Quick Questions
  • Pick a Package that best fits your requirements
  • Fill in our questionnaire that take less than 10 minutes
  • Provide basic details & documents required for registration
  • Make payment through secured payment gateways
2. Experts are Here to Help
  • Assigned Relationship Manager .
  • Preparation and filing of Application
  • Registration under MSME Department
  • Firm Seal
  • Certificate of IncorporationAllotment of TAN
3. Your Business is incorporated
  • All it takes is 4 working days*
*Subject to Government processing time

Process to register Proprietorship online

Day 1
  • Business registration consulting
  • Collection of basic information
  • Provide Required Documents
Day 2 - 3
  • Preparation of online application
  • Online Sole Proprietorship registration
  • Application for allotment of TAN
Day 4
  • Dispatch of Firm seal and other materials if subscribed*

Explore Sole Proprietorship Firm Registration – Its formation and registration

Frequently Asked Questions


Commencing a proprietorship business in India requires the proprietor to be an Indian citizen and a resident of India. Prior approval is unnecessary before starting the business. Nevertheless, Non-Resident Indians (NRI) and Persons of Indian Origin must acquire government authorization before initiating or investing in a sole proprietorship business.

Sole Proprietorship is an unstructured business format, and there is no specific law mandated for its registration. However, LegalWiz.in offers registration services for Sole Proprietorship under the Central Government's MSME (Micro, Small, and Medium Establishments) Development Act, 2006. The business entity must satisfy the registration criteria.

Starting a Sole Proprietorship Firm is possible with any amount of capital. It is necessary to introduce an amount that is adequate to commence the business. Since there is no limitation on the infusion or withdrawal of funds, the proprietor has the autonomy to modify the capital at any time. The decision to introduce capital into the business is solely the proprietor's prerogative.

The Reserve Bank of India requires two forms of registration for a Sole Proprietorship Firm to open a bank account in its name, along with the proprietor's PAN card, identity proof, and address proof. Acceptable forms of registration include MSME registration, GST registration, registration under the Shop & Establishment Act, professional licenses, Chartered Accountant certificates, or other forms specified in RBI's Know Your Customer norms or required by the respective banks.

There are no specific regulations or requirements for registering the name of a Sole Proprietorship Firm, allowing it to adopt any available name without infringing on registered trademarks. However, since there is no registry or regulation for registering the name of a Proprietorship, the only way to ensure the exclusive use of the business name is to obtain a Trademark Registration for the name. .

Once a sole proprietorship firm is registered, the proprietor and the business are indistinguishable from each other. Therefore, both the proprietor and the business have the same PAN card. Additionally, the assets and liabilities of the proprietorship firm are considered as those of the proprietor, and vice versa.

A business registered under the MSMED Act can take advantage of various subsidies, incentives, and schemes offered by the Central Government for that specific type of business, based on its registration certificate.

The registration under the MSMED Act is open to all business entities. However, the Central Government has recently excluded trading activities from being registered under this Act. Instead, businesses engaged in trading activities can apply for registration under the Shop & Establishments Act.

A defining characteristic of a Sole Proprietorship Firm is that it is owned and controlled by a single person, meaning there can be no other business partners. If your business requires the involvement of partners, you may need to consider forming a Partnership Firm, Private Limited Company, or Limited Liability Partnership instead.

A sole proprietorship business is exclusively owned, managed, and controlled by a single individual. Therefore, it is not authorized to issue shares or have investors.

Sole proprietors are required to file their annual tax returns with the Income Tax Department, and may also need to file other tax returns such as GST returns, depending on the nature of their business activities and registrations. However, unlike limited liability proprietors and companies, they are not obligated to file annual reports or accounts with the Ministry of Corporate Affairs.

It is possible for a company or LLP to take over a proprietorship. However, the process is complex, costly, and time-consuming. Hence, entrepreneurs should consult experts and consider starting an LLP or Company instead of a proprietorship to save time and money.

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