Online Sole Proprietorship Firm Registration In India
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Online Sole Proprietorship Firm Registration in India
Sole Proprietorship Firm – Overview
In India, a business run by a single person is known as a proprietary business, and the owner of the business is referred to as the proprietor. Proprietorship is the most common form of business in India and can be easily established with minimal regulatory requirements. While it is not possible to fully register a proprietorship with the Indian government, obtaining tax and other business registrations can help demonstrate the existence of the business. Some common registrations for a proprietorship in India include
– Professional Tax Registration
– GST Registration
– Shop and Establishment Registration
The owner of a sole proprietorship is responsible for signing contracts in their own name, as the business does not have a separate legal identity. Customers may be asked to write checks in the owner’s name, even if the business operates under a different name. Sole proprietorships do not have the same legal separation between personal and business assets as partnerships, LLPs, and corporations, and the owner may mix personal and business property and funds. Sole proprietorships typically have bank accounts in the owner’s name and are not required to follow formalities such as voting and meetings. The owner of a sole proprietorship can bring lawsuits and be sued using their own name.
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Documents Required for Proprietorship Firm Registration
- Aadhar card or any identity proof of the owner
- PAN card of the Owner
- Business account (Current account)
- Address Proof of Business (Rent Agreement, Electricity Bill)
Compliances Required for Sole Proprietorship Firms
As a sole proprietorship is not a separate legal entity from the proprietor, it has minimal compliance requirements, which are mainly related to taxes and annual filings. The main compliance requirements for a sole proprietorship in India include:
- Sales Tax (VAT) Returns: Sales tax (VAT) returns must be filed quarterly during the assessment financial year on the following dates:
– April to June: July 25
– July to September: October 25
– October to December: January 25
– January to March: April 25 - Service Tax Returns: These are filed on half yearly basis, on the following due dates of the assessment financial year.
– For April to September – October 25
– For October to March – April 25 - Income Tax Returns: ITR (Income Tax Return) must be filed annually on the following dates, depending on whether a financial or tax audit is required:
– When audit is not necessary under any law: July 31 of the assessment financial year
– When audit is compulsory under any law: September 30 of the assessment financial year. This applies when the annual turnover of the proprietorship firm exceeds INR 1 crore or the service turnover is more than INR 25 lakh.
Benefits of Sole Proprietorship Firm Registration
There are several advantages to registering a sole proprietorship, including:
- Easy to set up: Sole proprietorships are relatively easy and inexpensive to set up, as there are few regulatory requirements.
- Flexibility: As the sole proprietor, you have complete control over your business and can make decisions quickly and easily without consulting with partners or shareholders.
- No legal formalities: Sole proprietorships do not need to follow formalities such as holding meetings or voting, which can be time-consuming and costly.
- Privacy: Sole proprietorships do not need to disclose financial information publicly, which can be beneficial if you prefer to keep your business affairs private.
- Tax advantages: Sole proprietorships may be eligible for certain tax benefits, such as being able to claim business losses on your personal tax return.
- Potential for profit: As the sole owner, you are entitled to keep all the profits of the business.