Sole Proprietorship Registration | Register Your Proprietorship Firm Online

A proprietorship is a business structure where a single individual owns and manages the entire business. The proprietor is personally liable for all the debts and obligations of the firm. Proprietorship firms are easy to set up and operate, making them a popular choice for small businesses and startups in India.

A proprietorship company is a type of business structure where a single individual owns and runs the business. As a sole proprietorship, certain compliances need to be followed to ensure legal and financial compliance. Some of these compliances include:

• Business Registration: The proprietorship must be registered with the local authorities.
• Business Licences and Permits: Depending on the nature of the business, various licences and permits may be required, such as a shop and establishment licence, a trade licence, a professional tax registration, etc.
• PAN and GST Registration: The proprietorship must obtain a PAN (Permanent Account Number) and register for GST (Goods and Services Tax) if the annual turnover exceeds the prescribed limit.
• Income Tax Returns: The proprietor must file income tax returns every year, depending on the income earned during the financial year.
• TDS Compliance: If the proprietorship makes payments to vendors or contractors, TDS (Tax Deducted at Source) may need to be deducted and deposited with the government.

There is no specific minimum funds requirement for starting a proprietor company, as it depends on the nature and scale of the business. However, the proprietor should have sufficient funds to cover the initial expenses of setting up the business and operating it until it starts generating revenue.

It is advisable to create a detailed business plan that outlines all the expenses involved in starting and running the business and to ensure that there is adequate funding to cover these expenses. The proprietor can also explore various sources of funding, such as personal savings, bank loans, or investments from friends and family, to cover the initial expenses.

The existence of a sole proprietorship is not fixed or predetermined, and it can exist as long as the proprietor desires. In a sole proprietorship, the business and the proprietor are considered the same, and there is no legal distinction between them.

If your turnover (annual sales) is more than ₹40 lakhs for goods (₹20 lakh for most states) or ₹20 lakhs for services (₹10 lakh for special category states) for services or if you are supplying goods or services across the states, then GST registration is compulsory.

You can use a personal account, but it is highly recommended that you open a separate business current account. It will help in better bookkeeping, giving credibility, and having clarity during audits or tax filings.

Yes, you can convert or change your sole proprietorship into a private limited company, LLP or partnership as your business grows. We are there to help you through that process, too.

Click here to read more about Sole Proprietorship vs Pvt Ltd Company.

Since the owner and the business are not separate legal entities, business profits are taxed under the owner’s personal income tax return. You might have to file either ITR-3 or ITR-4 (based on your income sources). If you are registered under GST, then you will also file GST returns (monthly/quarterly as per rules).

In sole proprietorship, the proprietor has unlimited liability, which means that personal assets (house, car, savings) will be at risk if business goes into debt or there are legal claims against it.

No, you can only run one sole proprietorship under your PAN, yes just one, if you try to do two it won’t quite work like that. If you’re thinking of operating two separate businesses then you’ll have to register one as a partnership or a private limited company, or else ask a family member to register the second one under their own sole proprietorship, somehow.

Udyam is an optional MSME certificate; it’s kind of different from sole proprietorship registration. You should get it if you’re a manufacturer, or you are aiming for government subsidies, or you want easier bank loans, or you plan to bid for government contracts. If you’re a service provider or you’re a startup, you can keep it for later and skip it at the beginning.