A sole proprietorship is one of the oldest and easiest Business Structures to start in India. A proprietorship is a type of business that is owned, managed, and controlled by one person – who is the proprietor. As the proprietorship and proprietor are one and the same, it is very easy to start and there are very minimal compliance requirements.
As the proprietor and the business are one and the same, a proprietorship cannot have other partners or shareholders. Further, there is no limited liability protection for the proprietor from the business activities conducted in the sole proprietorship. Hence, this type of business entity is best suited for every small business with no more than 5 employees.
SRN Filings can assist you in registering a Sole Proprietorship, a simple and efficient business structure that is ideal for solo entrepreneurs. With our expert guidance and streamlined process, you can start your proprietorship firm registration online quickly and hassle-free. Start your Sole Proprietorship registration with us and unlock the potential of your business ideas.
Registering a proprietorship in India follows a unique approach, as there isn’t a dedicated government-established registration process for this business structure. Instead, a proprietorship firm registration gains recognition through tax registrations mandated by relevant laws and regulations. One pivotal tax registration is the GST (Goods and Services Tax) Registration, which must be secured under the proprietor’s name to formalize the business’s proprietorship status. This registration signifies that the proprietor is conducting business within the framework of a proprietorship.
To run a proprietorship in India, you need important licenses and registrations, including:
Easy registration: Sole proprietorship does not have any formal incorporation or dissolution process – as it’s the same as the Proprietor. However, to operate a business, the proprietor may have to obtain certain registrations and licenses to be compliant with the laws and regulations of India.
Lower compliance: As most proprietorships are only registered with government departments like Income Tax & GST, the compliance burden will be lower. On the other hand, entities like LLP or Company are registered with the Ministry of Corporate Affairs and have to file various statutory returns and be audited by a Chartered Accountant each year.
Simplicity: As there are no partners, shareholders, or directors, the proprietor can easily operate this business with minimal documents and consent requirements. Hence, this type of business structure is best suited for very small businesses.
Business decision: In a proprietorship, the business owner makes all business decisions. There is no consent or approval required from any other person. Hence, a proprietor can normally make quick decisions regarding his business affairs.
Complete control: A sole proprietorship is owned only by the proprietor. He/she has complete control over the assets, revenue, expenses, and all business operations.
Funding: This type of business structure relies solely on one person’s savings, borrowings, and credit history. As there are no other persons involved in this type of business structure, raising funds from banks will be very hard. Raising equity funds will not be possible – as this type of business entity does not allow for-profit sharing or shareholding.
Personal liability: If a proprietor is unable to pay business loans or taxes, in a proprietorship – the personal assets of the business owner can be attached or encumbered. Hence, in this type of business structure – the proprietor will be held personally liable until all the liabilities are extinguished.
Business continuity: In case of death or disability of the business owner, the sole proprietorship will be automatically dissolved. Hence, there will be no business continuity.
Growth: A proprietorship has various restrictions in terms of fundraising, liability, and business continuity. Hence, only very small businesses that are in the unorganized sector operate as proprietors.
Unincorporated business: Sole proprietorships are unincorporated businesses. Hence, there is no centralized database available to see if a sole proprietorship is active or inactive. Thus, sole proprietorship entities are mostly classified as unorganized businesses.
You can easily complete proprietorship firm registration online through SRN Filings. For a sole proprietorship registration, only the PAN & Aadhaar card of the business owner is required. We can help you obtain the following registrations in less than 15 days:
Once, you have registered for the proprietorship firm registration online on SRN Filings, please follow the steps below and upload the following documents by logging into LEDGERS.
A proprietorship is not a separate business entity. Hence, there is no procedure to obtain a proprietorship PAN card. The PAN card of the business owner is used for the proprietorship.
GST registration for a proprietorship will be obtained by SRN Filings as a part of the service. The following documents are required for GST registration:
Udyam Registration can be obtained online to avail various benefits available for small and medium-sized businesses. Once the GST registration is obtained, the SRN Filings team will help obtain UDYAM registration by submitting an Aadhaar card, PAN card, and GST certificate to the Government.
The bank current account for a proprietorship will be opened in the name of the business owner using his/her PAN. The business owner will have to submit proof of doing business. Any two of the following documents can be submitted to create a current account instead of a savings account in the name of proprietorship:
From state to state, the process for acquiring a Shop and Establishment registration certificate changes. It is available both online and offline. In most states, Shop and Establishment Act registration can be obtained within 2-3 weeks.
A sole proprietorship registration can normally be done in India through SRN Filings in less than 15 days. However, the timelines for registration will vary from case to case depending on the government and bank processing timelines.
A proprietorship can undertake any type of business activity that an Indian person can undertake across most sectors and industries. However, there are some activities like banking, insurance, financial services, lending, defense, and telecommunication that require specialized approval. In such cases, a company is mandatorily required to obtain various approvals from the Government. Hence, the proprietorship business structure only works for business activities that are small-scale in nature.
The following are some of the compliances that are applicable for a sole proprietorship registration:
Income Tax Filing: The business owner of a proprietorship will have to file a personal income tax return using the form ITR-3 or ITR-4.
Business Income: Only income tax forms ITR-3 and ITR-4 allow for declaring business income. Hence, all proprietorships will have to file form ITR-3 or ITR-4 to be compliant with the income tax regulations.
GST Return Filing: If a proprietorship has GST registration, GST return must be filed every month and quarter as per the scheme under which the business is registered.
TDS Returns: In case the proprietorship is having employees or purchasing goods/services beyond a certain threshold – tax must be deducted at source and TDS returns must be filed every quarter.
In addition to the above, various other compliance requirements may be applicable to the proprietorship based on industry and location.
