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Sole Proprietorship Firm Registration

As we know, India is one of those countries which is full of people who are managing and operating their business by choosing Sole Proprietorship as their business structure. Moreover, this business model requires compliance with very few legal formalities and is suitable for the people who do not have adequate capital. Further, sole proprietorship registration is required for the businesses which are owned, managed, and controlled by a single individual, as it will eventually help them in carrying out business operations with ease and flexibility.

Nowadays, the Sole Proprietorship as a business model is mostly chosen by the micro and small enterprises with less investment, operating in the unorganized sector. Moreover, it is also ideal for the embryonic entrepreneurs who want to start their own business. Lastly, some of the examples of a sole proprietorship are salons, grocery stores, chemist shops, photo studios, etc.

Sole Proprietorship Definition

The term Sole Proprietorship refers to a business structure that is simplest and easiest to form and also requires compliances with minimal legal formalities. Moreover, there is no such formal regulating act prescribed for governing the registration of sole proprietorship.

Further, the concept of Sole Proprietorship does not enjoy the status of a separate legal entity, and also the ownership of a sole proprietorship firm is not qualified to be transferred to another individual. Hence, the existence of the business will come to an end with the death of the owner.

Who is a Sole Proprietor?

A living individual who is the owner of the sole proprietorship firm is known as the Sole Proprietor. Moreover, he must be both an Indian citizen and also a resident. Further, a Sole Proprietor is solely entitled to all the profits earned in the firm and also solely and personally liable to bear all the losses incurred.

Hence, as per the concept of the Sole Proprietorship, there is no legal dissimilarity between the owner and business. Furthermore, it shall be relevant to take into consideration that a corporate entity is not eligible to become the Sole Proprietor of the firm.

Why should one opt for a Sole Proprietorship Firm Registration?

The following listed are the reasons as to why should one choose a Sole Proprietorship Firm:

  • Provides flexibility in carrying out the business activities
  • One of the oldest, most straightforward, and most accessible forms of business models
  • Single hand control
  • Easy to start and close
  • Hassel-free business structures, that, too, with very few compliances.
  • Self-Accountability
  • Owner of the Sole Proprietorship Firm is considered to own boss. This means he is not answerable and accountable to any shareholder and director
  • Decision-Making power
  • The Sole Owner is not required to share income and profits generated with anyone
  • No chance of any dispute between the partners or directors or shareholders

Advantages of the Sole Proprietorship Firm

The benefits or the advantages of a Sole Proprietorship Firm is enumerated below:

  • The Proprietorship firm is not obligated to obtain Compulsory Registration.
  • An individual who wants to start a sole proprietorship firm can do it without following any formalities.
  • Another significant advantage annexed with the concept of sole proprietorship firm is the minimum compliance requirement.
  • A Sole Proprietorship firm is not required to get its accounts audited statements with the MCA (Ministry of Corporate Affairs) each year.
  • A Sole Proprietor having an income of less than Rs 2 lakhs is not supposed to pay the income tax.
  • A single person can easily start a Sole Proprietorship Firm.
  • For the Sole Proprietorship Firm Registration, there is no such minimum limit prescribed for the capital requirement as it depends upon the sole owner and his will.

How to start a Sole Partnership Firm in India?

In total, there are only two requirements that are to be followed while incorporating or establishing a Sole Proprietorship Firm in India. The following listed are the two requirements that are to be complied with for commencing or setting-up a Sole Proprietorship Firm:

  • Choose a Unique Business Name.
  • Choose a Location as the place of carrying out business.

After fulfilling these two requirements, one can legally start doing business.

Documents Required for Sole Proprietorship Firm Registration

The following listed are the documents required for obtaining Sole Proprietorship Registration:

  • PAN (Permanent Account Number) Card
  • Aadhar Card
  • Bank Account
  • Registered Address Proof

Further, a Sole Proprietorship Firm does not require any specific registration. However, in order to run a business smoothly and with ease, the owner of the business is required to get registered under the following listed:

  • GST Registration
  • MSME Registration
  • Registration under the Shops and Establishment Act

Other documents required for the registration of sole proprietorship firm are as follows:

  • License or the Certificate issued by the Municipal Authorities
  • CST (Central Sales Tax) or VAT (Value Added Tax) certificate
  • ITR (Income Tax Returns) documents
  • Certificate granted by the Sales Tax or Service Tax or Professional Tax authorities
  • Certificate allotted by the Food and Drug Control Authorities, IMC (Indian Medical Council)
  • IEC (Import Export Code) allotted to the Sole Proprietor by the office of DGFT (Director General of Foreign Trade)
  • Utility bills in the form Water Tax Bill, Electricity Bill and the Landline Telephone Bills issued in the name of the concerned Sole Proprietor

What is the Process of obtaining Sole Proprietorship Registration?

A Sole Proprietorship is formulated by way of various other registrations and licenses. Some of the standard registrations to be followed to obtain a Proprietorship Firm are as follows:

  • MSME Registration: MSME (Micro Small and Medium Enterprises) or the Udyog Aadhaar registration can be acquired in the name of the business in order to establish that the concerned Sole Proprietorship firm is registered under the Ministry of Micro, Small and Medium Enterprises.
  • TAN Registration: TAN (Tax Deduction Account Number) Registration should be obtained for the concerned proprietor from the IT department. However, the said proprietor is required to obtain TAN Registration only if he or she is making salary payments in which TDS (Tax Deducted at Source) deduction is required.
  • GST Registration: GST (Goods and Service Tax) registration should be obtained by the Proprietor, if he or she is selling goods or services that exceed the prescribed threshold of GST turnover for registration. Further, in most of the states, GST registration is needed for those service providers who are having an annual turnover of more than Rs 20 lakhs, and in the case of traders, the annual turnover must be more than Rs 40 lakhs.
  • Import Export Code: An Import Export Code (IEC) can be acquired from the DGFT (Director General of Foreign Trade) in the name of the business. However, the same is possible only in case the said Proprietorship firm is dealing in the export and import of goods into India.
  • FSSAI Registration: FSSAI Registration is required only in the case where the proprietorship firm is involved in the business of selling food products or in the handling of food products. Further, an FSSAI registration is obtained in the name of the Proprietor from the FSSAI (Food Safety and Standard Authority of India).

Compliances to be followed after Sole Proprietorship Firm Registration

The that are must be complied with after obtaining sole proprietorship registration are as follows:

  • TDS (Tax Deducted at Source) Filing
  • Filing of Income Tax Return (ITR)
  • GST (Goods and Service Tax) Compliances
  • Drafting of Financial Statements
  • Tax Audit Compliance
  • Documentation of the Invoices concerning sales and purchase

Why Choose Swarit Advisors?

  • Swarit Advisors provides end to end assistance regarding the registration process.
  • While assisting in the process of registration, we will fill the form on behalf of our client and also help them in submitting the documents.
  • We will keep track of the whole registration process and will continue to guide our clients
  • We keep high touch communication with our valuable clients and also promptly reply to them.
  • For us, client satisfaction is paramount
  • We are committed towards the quality work
  • We help our clients in solving their business issues also ensures continuous networking of the business.
  • We provide instant and immediate responses to requests made to us.
  • We have a wide range of skilled, professional, and experienced experts who will provide friendly knowledge support, affordable hosting solutions and also ensures a successful online presence.
  • We at Swarit Advisors help our clients even with the post-incorporation compliance requirements.

Package Inclusions

  • Business Activity Discussion
  • Proprietorship Name Finalization
  • MSME and GST Registration Certificate
  • Annual Tax Returns
  • Accounting and Business Planning

FAQs for Sole Proprietorship Firm

No, obtaining registration is not mandatory for a Sole Proprietorship Firm. It is optional and discretionary on whether a person wants to register his sole proprietorship or not. However, banks insist on getting a sole proprietorship registered if the owner of the said firm intents to get a bank account opened in the name of his business, but according to the law, it is not mandatory.

Yes, obtaining GST Registration is mandatory for a Sole Proprietorship Firm only in the following listed conditions:

  • If in case the annual turnover of the said business exceeds the limit needed for obtaining registration under GST (Goods and Service Tax) (At present, it is Rs. 40 lakhs for the business and Rs. 20 lakhs for the services).
  • Agents and ISD (Input Service Distributors)
  • Persons liable to pay tax under the Reverse Charge Mechanism.
  • Person who supplies by way of e-Commerce aggregator
  • E-Commerce aggregator
  • roviding online information and the database access or the retrieval services from any place outside India to a person residing in India, other than a registered taxable person.


The Sole Proprietorship Registration means registering an unregistered business that is owned, controlled, and managed by a single person.

Yes, a Sole Proprietor has the authority to appoint an employee. Moreover, there is no such limit prescribed on the maximum number of employees that he or she can hire.

Yes, the Sole Proprietor is considered as the owner of the business.

Sole Proprietorship Firm as a business structure is chosen by small businesses like the Grocery stores, Photo Studios, Barbershop, and IT consultation services etc.

In the case of a Sole Proprietorship, the concerned Sole proprietor has total control and authority over the business operations and is also entitled to receive all profits.

The compliances that needs to be followed after obtaining Sole Proprietorship Firm Registration are:

  • TDS Return Filing
  • Filing of ITR (Income Tax Return)
  • GST compliances
  • Drafting of financial statements
  • Online tax audit
  • Documentation of invoices of sale and purchase

The advantage or the benefits annexed with the concept of Sole Proprietorship Firm Registration are as follows:

  • Individual’s investment
  • Ownership
  • No profit or loss Sharing
  • Unlimited liabilities
  • Fewer compliances
  • Less formalities
  • Control power

In India, a person can have a multiple number of sole proprietorship business registered under his or her name. There is no specific limit or restrictions prescribed under the Indian Law. However, the concerned sole proprietor is required to provide valid documents like a valid office address, PAN card, and TAN No for every business.


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