Sole proprietorship registration is the best option for an individual entrepreneur, sole trader, or anyone who doesn’t want to go through the lengthy process of forming their company. A new company will require an initial investment to pay for fees. This is not the case for sole proprietorship. To ensure that payments are made in the proprietorship’s best interests, you need to open a current bank account. This is why opening a current account can be considered the foundation for this type of business.
This is the most popular structure of business in India. GOI defines sole proprietorship as a business that is managed and controlled by one person. It is therefore cost-effective since there are no fees for the initialization of the process. The primary establishment is simple because there is no registration. We are therefore able to avoid the need for registration and save ourselves from any government supervision.
There are many other benefits to starting a sole proprietorship firm
- The owner retains all rights and has full control of the ownership stake
- No minimum capital investment
- Profits are solely the property of the owner
- Double taxation is avoided by tax assistance
- Only the owner is responsible for filing an annual tax return, and paying tax as an individual.
- There is no additional tax for the firm
There are some mandatory requirements to start a sole proprietorship
These are the four essentials to starting a business.
- Aadhar card
- PAN card
- Bank account
- Register office proof (Rent Agreement, Property Documents).
Start your business
Registration is used primarily to confirm the existence of establishments. The government is responsible for bringing the corporation into existence through registration. Starting the business, on the other hand, is making it a reality and thereby achieving functionality. A sole proprietorship in India can be established using only two things.
- Choose a name that best describes your business
- The location of your business
Register of sole proprietorship
There is no set procedure to register a Sole Proprietorship. This is because it is an extension to the proprietor. However, it is established by opening a bank account in its name. It can also be done by obtaining the necessary licenses to operate a business.
Register for an Account
Correct documents are essential for opening an account. The correct documents can then be submitted.
- Certificate or license from the Municipal Officials under the Shop and Establishment Act
- Document for Property Registration
- Together with your utility bill, you can also rent an agreement
- From the registering Authority: License
- The license for the concerned person from the central or state governments
- IEC Code
- Complete Income Tax Return of the Owner (Complete).
- Utility bills
By issuing license
The type of business will determine the type and amount of licenses required to register it. They are rare:
- PAN Card for the Proprietor – A PAN card is a must in the business sector. It helps in obtaining licenses and certificates, company registrations and filing the tax return to Sole Proprietorship. The PAN is the same for both the business and the proprietor. This is the first step in establishing a Sole Proprietorship.
- GST Registration – GST registration is required for all manufacturing and trading companies in India that have an expected turnover of more than Rs 40 Lakhs or Rs 20 Lakhs for states with special categories. All businesses that deal with goods or services must have a GST registration. To obtain GST, you will need a license to open a Sole Proprietorship.
- Shop and Establishment Act license – This acts as proof of existence. This license is also issued to most businesses that deal with shops or factories.
- MSME Registration- This is possible in almost all states of our country, provided that the company falls under the MSME sector. Udyog Adhaar certificate.
These requirements can be met legally to start a sole proprietorship.