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Sole Proprietorship Registration

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  • Business Activity discussion
  • Proprietorship name finalization
  • GST & MSME Registration Certificate
  • Annual Tax Returns
  • Accounting and Business Planning
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What is Sole Proprietorship?

Starting a business under sole proprietorship is easy and convenient. A sole proprietorship is neither a company nor a corporation. The business is owned by an individual. The sole proprietorship firm registration is done with a motive to open a current bank account and start a small business. When an individual who owns any products or services and starts selling it, they are nothing but automatically establishing themselves as the sole proprietorship. Many entrepreneurs are running and selling their product under sole proprietorship. The income is basically reported as the business income or losses by the owner in his/her individual income tax return.

What is Sole Proprietorship Registration Online?

Sole Proprietorship registration online is completely a digital process and hence you can register your business without leaving from home or office. Generally, a person desirous to establish and profess the business as a sole proprietorship firm requires starting with certain basic requirements such as one need to have a Current Bank Account on the Name of Business to support the ease of doing business. Starting a business as a Sole proprietorship firm is easy in India with less compliance and less costing.

Sole proprietorship registration is required for the individual owned business and India is toward ease of doing business, hence it is suggested to obtain the given below registrations to make his business function smoothly and legally. You can select any of registration from the below:

  • Shop and Establishment Registration under the laws of the respective states
  • Registering as SME
  • GST Registration

What are the Rules and Regulation for Sole Proprietorship Registration Online?

In India, a sole proprietor firm registration should be done under GST Act or MSME act, Shops and Establishment registration under the state Act, rule, and regulations play a vital role in growth and ease of doing business in a state.

What are the Features of a Sole Proprietorship Firm Registration?

  • No sharing of Profit and Loss

    All the income or loss or any such revenue generated from the sole proprietorship firm business belongs to the sole proprietor only, no sharing of the business profits and losses is followed.

  • Individual’s capital

    To start the business or to continue operations the capital invested is of that of sole proprietor only, which can be either from his personal resources or by borrowing.

  • Single Ownership

    A single person owns the entire business and all the assets and property belongs to the proprietor, there is no separation between the two. All the risk associated with the enterprise is that of the owner

  • Unlimited Liability

    The biggest disadvantage is an unlimited liability. In the event of loss, even the personal assets of the proprietor can be attached.

  • Less Legal Formalities

    Very easy to establish no such legal requirements for formation, operation, and closure.

  • Single Control

    Central control is maintained by only one person is in charge of all the activities.

  • No legal distinction between the proprietor and business:

    The sole proprietor uses his own skills, intelligence and expertise to operate the business.

What is required to be done after Sole Proprietorship Firm Registration?

  • Comply GST Registration rule for Proprietor
  • Avail MSME Registration benefits
  • Carefully use HAC/SAC Code during GST Registration
  • Subscribe Enterslice services for GST Returns Monthly / Quarterly
  • Club your all business and other income in your Personal income tax return

How to own business as a Sole Proprietorship in India – Procedure for Sole Proprietorship Firm Registration to be followed

Steps involved in Starting a Sole Proprietorship Firm

  • Starting a business as a sole proprietorship is the easiest form of business and only for the sake of necessity required to run a business certain registration are required to obtain.
  • Decide your business name and if needed go for DBA
  • Open a business current account to facilitate the transaction
  • To form a platform, it is advised to open a website, and
  • Yes, finally hold on for some customers. 

What are the services Enterslice Offers to Sole Proprietorship Firm?

  • GST registration
  • MSME registration
  • Shop and Establishment Act License
  • Current account opening
  • Set of legal agreements and documents applicable to a startup
  • Legal advisory, updates, and developments

Sole Proprietorship Firm Registration Fees

Package 1

GST registration+ MSME Registration+ Assistance opening of current account Rs. 3500 +GST

Package 2

GST registration + MSME registration+ Assistance In opening of current account + Trademark registration in one class Rs. 9999 + GST

Documents required for Sole Proprietorship Registration

Sole Proprietorship isn’t governed by any specific laws it has the minimal and easy compliance.

For Sole Proprietorship registration, the following documents are required:

  • Aadhar Card
  • Registered office proof
  • PAN Card
  • Personal Bank Account

The Advantages of choosing Sole Proprietorship Registration in India

  • Business secrecy is maintained
  • Informed decision making is done and prompt action is followed
  • Operations are quite flexible
  • Least record keeping
  • Accountability is your own
  • Strong personal relation
  • It is the oldest and simplest business forms 
  • No hazel to establish your business. It automatically exists as soon as you start to sell something.
  • No second set of business tax forms to complete
  • Sole proprietorships have the lowest tax rates.
  • No need to publish its financial accounts or any other such documents to any members of the public. Hence a great deal of confidentiality is maintained, which is quite important in the business world.
  • The owner drives the maximum incentive from the business.
  • Not required to share any of his profits.
  • Being your own boss system and sense of satisfaction and achievement is achieved
  • It acts as a great boost to your self-worth as well.
  • Easy star and closure procedure
  • Direct control
  • Common examples of sole proprietorship business are grocery shop, chemist shops, beauty parlors, fabrication units and so on.

Disadvantages of Sole Proprietorship Firm

  • Limited capital is applied to a sole proprietor who means and includes his/her own personal savings and money, he shall fear to borrow and less expansion of the business is followed. Banks and financial institutions are also hesitating in lending to proprietorships.
  • In a sole proprietorship firm, it is the unlimited liability of the owner which means in case of business fails even the personal wealth of the owner can be encroached and attached by the court as well and affects his future business prospects too.
  • Due to being handled by the single person, the managerial look into the business is limited and an expert eye is lacking in all the fields of the business.
  • Limited resources are available to it.
  • Lack of competent people and may result in mismanagement and poor decisions.
  • If any litigation is initiated against you and if sued, you are personally responsible for any judgment, it may affect your financial health.
  • It is also harder to raise money from investors or to secure a business loan.
  • In loan matters, a sole proprietorship is qualified for a personal loan easily which makes you personally liable if the business fails.
  • The life cycle of a sole proprietorship is undecided and is somewhere related to the owner's own will to haul the business and in cases where the owner is incapacitated in any way it may lead to the closure of the business. A sole proprietorship cannot carry on without its proprietor.

Sole proprietorship firm is simple and easy to create, but as your business grows, you may decide that establishing a limited liability corporation could provide more legal protection against lawsuits.

Legal requisites for a sole proprietorship: Taxes, Accounts, Audits, Other legislation


Any revenue which is earned by the sole proprietorship firm is considered as the personal income, for which personal taxes are to be paid. At the same time, there are no additional business taxes. You are required to pay income taxes and advance taxes, based on what you earned the previous quarter.

Now, what all Taxes are required to be paid by a Sole Proprietorship Firm?

Sole proprietorship firm must pay taxes in the same line and manner as other businesses.

In addition to income tax your business must pay the following:

  • Collect and pay GST on taxable goods and services sold.
  • Pay property tax on any real property (land and buildings) you own.
  • If your sole proprietorship firm has employees, you must collect, report, and pay employment taxes.


You have to maintain the proper books of accounts of your sole proprietorship firm.


No such audit is mandatory below annual turnover Rs. 1 Cr, but yes you may conduct your own internal audits, so as to know your defaults and loopholes if any.

Other Legal Requirements for Proprietorship Firm Registration

No statutory requirement is required to register the sole proprietorship firm; however, to advance your business you may require the following registration:

MSME registration benefits for Sole Proprietorship in India

MSME registration is optional as a sole proprietorship firm you can avail many benefits after MSME Registration.

The Small manufacturing enterprise can get them registered under the MSME Act. The application can be filed electronically.

Note it isn’t compulsory to register as an SME; however in your own interest it is highly beneficial. The SME registration is very helpful at the time of taking a loan for the business as the benefit of the various scheme launched by the government for SMEs can be availed only when you are registered with MSME at the concessional rate of interest.

Shop and Establishment Act License

This license is again not mandatory in all the state of India. However, where ever it is mandatory it is obtained according to the local laws. It is issued by the municipal party and is issued on the basis of the number of employees.

Trade license for a sole proprietorship Firm

This will depend on the type of business activity you are into and may require you to obtain state or local permits and/or licenses to legally operate your business.

DBA's for a Sole Proprietorship in India

DBA stands for “DO BUSINESS AS”. Usually, a sole proprietorship is formulated in your own name, in case it is not, you require to obtain DBA.

Until you use your personal name as your business name, no filling of documents is required. DBA form is required to be filled in such cases. However, not all states require DBA or “fictitious name” forms in that case.  You can apply for Trademark registration and Your Brand will be DBA.

Limited Liability Partnership vs. Sole Proprietorship Firm in India

LLP vs. Sole Proprietorship Firm

  • An LLP is governed by the Limited Liability Partnership Act, 2008; however, in case of a Sole proprietorship firm, no separate Act or laws are applicable.
  • In a “Limited liability partnership,’ the liability is a limited liability i.e. it extends only to the amount of capital contributed by them whereas in a sole proprietorship it has unlimited liability which gets extended to the amount of his/her personal estate.
  • In case the LLP, if the turnover is more than 40 lakh or capital contributions is more than 25 lakh compulsory audits required on contrary there is no compulsory audit requirement in the Sole proprietorship.
  • There is the exclusivity for the name to an extent that no one can apply for the same name in any other act in LLP on another hand there is no restriction on name usage one can register a sole proprietorship firm with the same name even the same business and in a different state.
  • Flat 30% as income tax on the income generated is required to be paid in LLP; however in Sole proprietorship Slab rates are applicable while computing their income tax.
  • An LLP can simply expand by opening branch offices in different states while a  sole proprietorship can only expand if it registers the same individuals in the different state

Private Company vs. Sole Proprietorship in India

Private Company vs. Sole Proprietorship Firm

  • A private company is registered under the Companies Act 2013 with the Ministry of Corporate Affairs, however, no such registration required under sole proprietorship.
  • A private company and must end with words Private Limited Company and a approval from the Registrar of the company is required to incorporate it,  No such approval is required before using the name in a sole proprietorship.
  • A private limited company is based on the separate legal entity concept under the Companies Act 2013; however, in case of sole proprietorship, the owner is personally liable for the liability of the business.
  • Liability in private limited company is limited to the extent of their shares only; on contrary the Liability in a sole proprietorship is unlimited.
  • In private company Minimum2 members are required and maximum- 200 members can be there and in Sole proprietor minimum and the maximum member can be one, however, employees can be hired to run the sole proprietorship.
  • FDI is allowed in many sectors, under the automatic approval route in the Private limited company however it is not allowed in Sole proprietorship business.
  • Shares transferability is the essence, no such activity is there in Sole proprietorship business.
  • Tax is charged at 30% plus surcharges and cess as applicable in Private limited company however separate treatment under business income, slab based is opted in Sole proprietorship.

Board meeting and general meetings to be conducted also Annual Accounts and Annual return are required to be filed with the Registrar of the company every year in a private limited company, however, in case of sole proprietorship no such requirement is there. It files income tax return on basis of income of the owner.

Conversion of Sole Proprietorship to One Person Company

Conversion of a Sole Proprietorship firm to One Person Company (OPC) is quite simple; basically, a fresh OPC registration is to be initiated.

Before you start registration to make sure there are two people one is the director/owner and other is the nominee. The steps are enlisted below:

  • Check at MCA portal about if an entity (LLP or Company) already exists same as your sole proprietorship, if yes, you are required to check for name availability in form RUN. If not, you can directly proceed for company registration
  • Obtain DSC from authorized signatory.
  • In case of fresh company incorporation DIN, PAN, TAN all can be applied along with the incorporation application SPICE-32 at the MCA portal.
  • Once the name is approved the director has to submit several documents such as Memorandum of Association and Article of Association, Identity proof of directors, address proof for the office.
  • The documents are examined by the Registrar of Companies and on successful verification, the certificate of incorporation is granted.

Open Person Company registration requires the efforts of a team of experts who can help you with converting your sole proprietorship firm into One Person Company with utmost care, hence it is highly recommended to hire such consultancy which is expert in it, in case you wish to know more or contact the Enterslice team.

GST Registration for a Sole Proprietorship Firm


  • Within state have more than 20 lakh rupees turnover.
  • Inter-state sales or services. (Example Rajasthan to Delhi)
  • E-commerce or internet based business
  • Traders/Retailer/Manufacturers/Aggregator

Documents required for GST Registration for Sole Proprietorship Firm

  • PAN card, Photo
  • Aadhar Card of the proprietor
  • Proof of business place
  • Bank statement copy

GST registration is received within 3-4 days of submitting the application our GST expert team of Enterslice can help you in GST registration, in case you don’t have PAN for the sole proprietorship we shall get you that to establish contact.

How to Open Bank account for Sole Proprietorship

  • Firstly, obtain PAN for your sole proprietorship.
  • Get GST registration certificate.
  • You must also have Aadhar Number and PAN.
  • Visit any bank for opening an account with them.
  • You shall also carry identity proof and address proof.
  • You may also require to provide other business related documents by the bank.

In case of any kind of assistance from Enterslice expert team or to know more contact.

Frequently Asked Questions about Sole Proprietorship in India?

No such statutory fees as such are required, only cost for respective other certificates involved say GST registration, MSME registration etc is required.

No, a minor cannot allow starting a sole proprietorship. Only a major whose age is above 18 can start a sole proprietorship firm.

Yes, a sole proprietor is allowed to hire and have employees.

Treatment in tax is like a sole proprietor is not entitled to tax deductions on salary paid to himself reason being logical that such payments are not business expenses. In case you do so you are merely is transferring funds from a business account to your own personal account only.

The business does not come under tax purview as such separately however, you must report all business income or losses on your personal income tax return.

Yes, you can do so as no legal restrictions as such are there for name usage and also for the fact that it is not a legal entity. It is a simple set up wherein a person starts his business and is accountable for his own acts.

As a sole proprietor, your business ceases to exist when you die. Your business's assets and liabilities become part of your estate.

The sole proprietor can transfer the business by selling its tangible and intangible assets; as there is no concept of a separate legal entity, the owner and business are one and the same.

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