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Sole Proprietorship Registration

Registering Sole Proprietorship through India Financial which is No. 1 Digital Platform is easy and convenient and gets it Started Today!

  • Discussion of Business performance
  • Finalizing the name of Proprietorship
  • Registration Certificate of Goods and Services Tax (GST) & Micro, Small and Medium Enterprises (MSME)
  • Tax Return Filing annually
  • Planning of Accounting and Business

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What do you mean by Sole Proprietorship?

Sole Proprietorship is a business which is carried out by an individual with the aim of opening current bank account in the name of a small business. It is neither a company nor a corporation.

Many entrepreneurs are running and selling their product under sole proprietorship when their competitors start selling their products or services.

Under the Income Tax Return filed by the individuals, income from the Sole Proprietorship is shown as the business income or losses.

How the registration of Sole Proprietorship is done Online?

Registration of Sole Proprietorship through online mode is completely an electronic process and hence you can get your business registered without any hassle. For registration you must have a Current Bank Account on the name of business to encourage the ease of doing business performance and operations.

It almost has nil legal compliance and you can register it with less investing cost.

Businesses which are owned by the individuals are required to register their business as Sole proprietorship Firm. To ensure the smooth functioning of business, it is advised to obtain the given below registrations. You can select any of registration from the below:

  • Shop and Establishment Registration under the laws of the respective states.
  • Registering as Micro, Small and Medium Enterprises (MSME).
  • Registration of Goods and Services Tax (GST).

Characteristics of Sole Proprietorship Firms

No division of Profit and Loss among others

Business’s profits or losses belong only to the proprietor. No sharing of profit or losses is carried out.

Capital is contributed by single person only.

As there is a single owner of the firm i.e. Proprietor and therefore capital is contributed by that person only.

No sharing of Ownership

All the assets, properties and even the liabilities are of that single person who conducts the operations of the business, and therefore all the risks which are associated with the enterprise belong to that proprietor only.

Unlimited Liability

Unlimited Liability is the worst characteristics of Sole Proprietorship Firm and as a result the personal assets of the proprietor may be confiscated in case of loss incurred by the enterprise.

Minimum Legal Compliances

Commencing the business, performing its operation and even the dissolution of the firm become easy in this firm.

Management in one hand

Proprietor is responsible for the Central control in the firm. A Proprietor is the only person who is in charge of all the activities.

Proprietor and business are the same:

There is no legal distinction between the proprietor and the business. Proprietor uses his own skills, intelligence and expertise to conduct the operation of business.

Post Requirements once Sole Proprietorship Firm gets registered

  • There is a requirement to comply with Goods and Services Tax (GST) Registration rule by the Proprietor
  • Avail benefits of Micro, Small and Medium Enterprise (MSME) Registration.
  • During Goods and Services Tax(GST) Registration, carefully use Services Accounting Code (SAC)
  • Subscribe India Financial services for GST Returns Monthly / Quarterly
  • In your Personal income tax return, income from business and other income sources are required to be clubbed.

Compliance Fees of Sole Proprietorship Firm

Package 1

Fees required for:-

Registration under Goods and Services Tax (GST)

Registration under Micro, Small and Medium Enterprise (MSME)

Rs. 3500 + GST for providing assistance in opening current account with the bank.

Package 2

Registration under Goods and Services Tax (GST)

Registration under Micro, Small and Medium Enterprise (MSME)

Assistance for opening of current account

Registration of Trademark in one class Rs. 9999 + GST

Documents for Registration of Sole Proprietorship

No specific laws govern the Sole Proprietorship. It has almost the zero or minimum compliance.

The Following documents are mandatory for registration of Sole Proprietorship:

  • Aadhar Card provided by the government.
  • Proof of Registered office.
  • Permanent Account Number Card.
  • Personal Bank Account i.e. in the name of the proprietor.

Benefits of Sole Proprietorship Registration

  • The confidential information of enterprise is protected.
  • Informed decision making is done and instant actions are followed as the decisions are not approved by the seniors positioned at hierarchy levels
  • Ease of conducting the operations of business.
  • Less maintenance of keeping records.
  • Proprietor is the only person by whom accounting is done.
  • It is the easiest and convenient form of business.
  • As soon as you start conducting the operation of business i.e. buying and selling of goods or services, establishing the business becomes easy.
  • The tax rate on Sole Proprietorship firm is also less.
  • Proprietor who is the owner of the enterprise is not required to disclose its financial accounts such as Income statement and Position Statement or any other such necessary documents with outsiders. Hence a great deal of privacy is protected, which is quite important in the business world.
  • The maximum incentives from the business are enjoyed by the owner of the firm.
  • All the profit of the business belongs to the Proprietor only.
  • As the enterprise is owned by the Proprietor only, due to which owner achieves full satisfaction and also all the rewards belong to him only. Proprietor is the boss of enterprise.
  • Self-worth of the proprietor is also developed and improved.
  • Commencing and closing procedure of the enterprise is easy.
  • No dilution of control of its management ( Direct Control)
  • Mostly seen examples of sole proprietorship business are tailoring shop, chemist shops, beauty parlors, stationary shops and so on.

Legal Compliancesthat are need to be fulfilled by sole proprietorship: Taxes, Accounts, Audits, Other legislation

Taxes

No additional tax provision is mentioned for Sole proprietorship firm, earnings of the firm are considered as the personal income of the proprietor on which tax has to be paid. Payment of income taxes and advance taxes are to be made on income earned in the previous quarter.

Tax Compliances to be made by Sole Proprietorship Firm

Like other enterprises, Sole proprietorship firms are also required to pay taxes.

Along with the income tax, the followings payments are also required to be released by the Sole Proprietorship Firm.

  • Whatever taxable goods and services have been sold by the firm, GST on the same has to be paid.
  • Property tax on the property (land and buildings) owned by the owner.
  • Collection, reporting, and payment of employment taxes are also required to be paid in case the enterprise recruits employees.

Books of Accounts

Maintenance of proper books of accounts and other necessary files is mandatory.

Audits of Sole Proprietorship firm

The audit of Sole Proprietorship Firm becomes mandatory where the annual turnover of the firm exceeds Rs. 1 Cr. Voluntary internal audit can be conducted by the firm to know about your own errors and loopholes.

Proprietorship Firm’s Other Legal Requirements

There is no such statutory requirement which is to be fulfilled by the sole proprietorship firm; however, to take your business at a high level you may take the registration of the following:

Shop and Establishment Act License

This license is not compulsory in all the states of India. However, the local authority issues such license in the state in which it is applicable.

Procedure of Opening Bank account for Sole Proprietorship

  • The first step is to acquire Permanent Account Number (PAN) for your sole proprietorship firm.
  • Obtain registration certificate of Goods and Services Tax (GST).
  • For registration of Sole Proprietorship firm one must have Aadhar Number and Permanent Account Number (PAN) along with identity proof and address proof.
  • Opening of Bank account.
  • Other business related documents are also required to be submitted when demanded by the bank.

In case of any kind of assistance or query from India Financial, our expert team is there and to know more contact us.

How India Financial will help you to get Sole Proprietorship Registration

 

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Frequently Asked Questions about Sole Proprietorship Registration

Only cost for obtaining certificates such as certificate under GST, certificate under MSME will be required.

Minor is not allowed to start the Sole Proprietorship Firm.

Yes, Proprietor is allowed to hire the employees to run the business of the firm.

Salary paid by proprietor to himself is not treated as business expense and hence deduction is not allowed for the same. It is just like transferring funds from a business account to your own personal account only.

Earnings(whether profits or losses) from the business is included in the income tax return filed by proprietors and hence Sole Proprietorship Firm does not come under the purview of Income Tax separately.

There are no such legal restrictions regarding the firm’s name, therefore you can use your own name as a firm’s name. It is a simple type of business wherein a person commences his business and is responsible for his own acts.

As a sole proprietor, your business ceases to exist after the death of proprietor. Assets and liabilities of businesses become part of your estate.

Ownership can be transferred by selling the tangible and intangible assets of the business; because the proprietor and the firm are one and the same and there is no separate legal entity concept exists.

Govind

Thank you very much for all your help in setting up my new company and clearing up all outstanding business in my sole trader accounts. For the first time in years I have peace of mind regards my business accounts. Your workforce are a credit to you, the girls at reception are so helpful and Chris has been brilliant. It is very much appreciated.

Govind

Delhi

Niketan123

Rajput Jain & Associates. are a tremendous value added to me as an executive and a busy parent. It just makes sense to delegate my tax file to them -- they are proactive, extremely service oriented, and most importantly, I am completely confident they are finding every dollar of tax savings available to me.

Niketan123

Delhi

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