Sole Proprietorship Registration

A sole proprietorship is a convenient and simplified way to commence a business in India. In a sole proprietorship business there is no legal difference between the owner and the business.

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Step 1

File Registration Application with the Ministry of Corporate Affairs (MCA)

Step 2

Obtain Certificate of Incorporation for your New Company.

Step 3

Overview of Sole Proprietorship Registration

Sole Proprietorship is arguably one of the most popular business structures in India. Unlike other companies, it adheres to minimal compliances that make the business journey more seamless. It is a kind of business structure where one person is responsible for handling the entire business affair. Sole Proprietorship doesn’t allow outsiders to intervene in the business proceeding or any other aspects unless the owner wishes them to do so.

Benefits of a Sole Proprietorship Firm

Every business structure renders different benefits. Following are some notable benefits offered by a Sole Proprietorship Business to its owners.

Fairly Easy To Establish

An applicant seeking to run their business affairs as a Sole Proprietor doesn’t need to undergo any registration process. They only need to secure business-specific licenses or registrations to run their business legally.

Seek Minimal Investment

Since the Sole Proprietorship model is a boon for low-cost business ideas, it is often chosen by small businesses like retail shop outlets, grocery retailers, so on and so forth.

Incorporation of business structure like a private limited company, OPC seeks significant expenditure in terms of capital procurement, which otherwise is nil in the case of the Sole Proprietorship model.

Ensures No Profit Distribution

The sole proprietors serve as the sole owner of their business and rejoice uncompromised control over their profit.

Adheres To Minimal Compliances

The Sole Proprietorship business model doesn’t come under the ambit of any specific law; hence, it is free to operate without tedious compliances. Unlike entities functioning under Company Act, 2013, they are free to work without a Certificate of Incorporation or Registration Certificate. Also, they are not obligated to disclose annual reports with MCA. However, such businesses need to stay in line with applicable GST compliances. In view of this, they are also mandated to register under the prevailing GST Act.

Attract Lower Taxes

Tax authority doesn’t treat Sole Proprietorship and Sole proprietor differently. Therefore, they do not need to address separate tax liabilities. Prevailing IT Act mandates sole proprietor to file an income tax return. It is a way to disclose profit and income generated before the tax authority for the given FY.

Please remember that tax estimation is done as per the income tax slab rates as applicable to the taxpayer. Therefore, there is no requirement of filing a separate tax return for the Sole Proprietorship firm.

Seamless Decision Making

Sole Proprietorship business outweighs other business structures when it comes to the decision making. It offers complete authority to the owner to take any decision regarding business affairs without intervention of anyone else.

No Auditing requirement for low income firm

The financial accounts of Sole Proprietor business are not exposed to mandatory auditing requirements. It only comes into play when a business income surpasses the certain turnover threshold underpinned by the concerned authority.

Checklist of Documents required to operate as an Sole Proprietor

  • PAN, photographs, & Aadhar Card of the proprietor
  • Utility bill of the business place such as water bill or electricity bill
  • Bank statement copy and other details such as account number and IFSC code
  • Applicants can avail of GST registration by submitting relevant e-application on the GST portal.

Checklist of Documents required to operate as an Sole Proprietor

  • PAN, photographs, & Aadhar Card of the proprietor
  • Utility bill of the business place such as water bill or electricity bill
  • Bank statement copy and other details such as account number and IFSC code
  • Applicants can avail of GST registration by submitting relevant e-application on the GST portal.
 

Step-by-Step procedure of registering a Partnership firm in India

Following is the detailed procedure of legalizing a partnership firm in India:

Step 1: Application for Registration

An application form must be filed to the ROFs of the respective state in which the Firm is situated and the standard fees. The registration form should enclose the signature of the proposed partners.

Usually, an applicant can send the application form to the ROFs via registered post. Refer to the below checklist before dispatching the application to the said authority. The checklist encloses the mandatory details that should be enclosed in the application form.

  • Proposed Firm’s name
  • The principal Place of business
  • Address of the ancillary unit, if any
  • The date of joining of each partner
  • The names & addresses of the proposed partners
  • Year of the establishment of the Firm

Step 2: Choose the legalized name of the Firm

Keep the following points in mind for selecting a suitable name for the proposed Firm;  

  • The name should not create a conflict of interest with any third parties or the existing Firm.
  • The name should be distinctive and original.
  • The name must stay in line with prevailing Act like Trademark Act and Emblem and Name Act, 1950.

Step 3: Certificate of Registration

If the Registrar finds no error in the submitted form & documents, he will grant the registration certificate & register the proposed firms in the Register of Firms.

The register of firms encloses all the details of the registered Firm and is accessible to business owners, i.e. partners, after the submission of the standard fees.

Leverage AkpaTax Service to Secure Mandatory Registration without any Hassle

In view of the above registrations and requirements, it is beneficial to avail support of an expert firm which can assure seamless delivery of the same without much hassle. That is what CorpBiz is all about. We are a professional firm which has more than five years of experience in licensing regime.

Frequently Asked Questions

Yes, provided the income of the sole proprietor is above the prescribed threshold limit as mentioned in GST law.

Commencing a sole prop business is not that tedious. To commence a sole proprietorship, all you need to do is:

  • Opt for a legally suitable business name.
  • Procure an apt location for your business.
  • File for business or state-specific licences that are in effect for the time being.

A sole proprietorship (aka sole trader, individual entrepreneurship, or simply Proprietorship) refers to a type of unincorporated establishment that is owned by a single person only. It is a simple business form that is quite popular in India.

The sole proprietorship model defies the concept of salary being transacted within the business. Whatever the owner earned as a sole proprietor is deemed his/her profit, not pay. However, you have the right to employ individuals and pay them a sole, but you cannot pay yourself that way.

Yes, a sole proprietor can be considered as self-employed because they operate business individually & do not work as an employee. Owing & operating your business affairs legally termed you as a self-employed business owner.

A sole proprietor lacks the adequate option for funding and third-party credit. Partnerships enable the business owner to share the operational and financial liabilities, thereby ensuring seamless growth for the business.

Most local establishments function as sole proprietorships, from grocery outlets to food vendors & even small manufacturers & traders. That doesn’t mean that larger businesses cannot function as sole proprietorships. However, it is not advisable from a growth standpoint.

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