Proprietorship Formation

Proprietorship Formation

To Start a Proprietorship Business No registration is required as such, The registrations like Shops & Establishment, Vat (Sales Tax) or Service Tax Registration are required as these are necessitated due to the activity which the proprietorship intends to do and is common to all forms of business, In Other words these registrations are needed by any form of business so it is also needed for proprietorship. However to open a bank account in the name of business two entity proof is insisted by the Banker, Our Specialists shall be assisting you with these requirements based on the geographical location of the business. A proprietor secures the capital, establishes and operates the business, assumes all the risks, hence accepts all the profits and losses, and pays all the taxes. There is no separate pan card needed in the name of the business, the pan card of proprietor is also considered as the pan card of the firm. The return of Income Tax and payment of taxes is also done by the proprietor only.

Advantage of Proprietorship Formation

Proprietorship Formation Procedure

Easy to Start

The proprietorship business can be started at will and it does not require any formal registration as such. However there are certain registrations which are common to all other forms of business which also applies on the proprietorship like Shops & Establishment Registration, Professional Tax Registration, Vat or Service Tax etc. The cost of setting up a proprietorship is comparatively low.

Proprietorship Formation Online


The proprietorship business should maintain proper books of accounts and at the end of the financial year prepare a balance sheet and profit and loss account. The taxable income of the business shall be added to the Income of proprietor and he shall discharge all tax liabilities of the proprietorship business and file information in his Income Tax Return before 31st July.

Partnership Registration

Capacity to Sue and to be Sued

A Proprietorship can be started by its owner with a separate name which over a period of time acquired goodwill and value. While deciding a name the care should be exercised to check if it conflict with other trademark. Setindiabiz specialists shall be providing you with free consultancy on Name Check and how to protect Business Name, its Logo, Punchline etc.

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For Budding Startups with projected Turnover Less Than 9 Lac in a Year.


  • TAN Allotment for Proprietorship
  • MSME Udyog Aadhar Allotment
  • Free Advice on Income Tax
  • Accounting for 3 Months
  • Name Check with Trademark registry



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For Service Providers which is likely to have a turnover more than 9 lac in a year


  • TAN Allotment for Proprietorship
  • MSME Udyog Aadhar Allotment
  • Free Tax Advice & Accounting for 3 Months
  • Name Check with Trademark registry
  • Service Tax Registration



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Suitable for business having turnover more than 10 lac & seeking brand protection


  • TAN Allotment for Proprietorship
  • MSME Udyog Aadhar Allotment
  • Free Tax Advice & Accounting for 3 Months
  • Service Tax Registration
  • Trademark Registration

Compare Your Option (Various Business Formats)

Private Limited Company
Limited Liability Partnership One Person Company Partnership
Sole Proprietorship
Suitability / Recommended For
Startup , Foreign Funded & Growing Companies Professional Service Firms, Like CA, CS, Lawyers Small Company with only one promoter Family Businesses Small Traders
Ease of accommodating Investment
Very Easy & Hassel Free Possible but not preferred by investor Impractical and not likely to secure No Impossible
Protection of Limited Liability
Yes Yes Yes Almost Impossible NO
Startup Tax Exemption
Yes No No No No
Tax Advantage
Few benefits Most Tax Efficient Few Benefits Minimal Minimal
Perpetual Existence
Yes Yes Yes No No
Statutory Compliance
High Low High Minimal Minimal
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Proprietorship Formation Procedure

Selection Of Name

As stated earlier there is no need to register a proprietorship firm in India, However the name of firm should be cross checked with the trademark registry to avoid any infringement or passing off the others Trademark or brand name

TAN Number Allotment

Every Business is required to comply with the provisions of Tax deduction at source, to make the collected TDS and file the TDS return TAN number is needed which is a unique number allotted by the Income Tax Department.


Udyog Aadhar Number enables a unit / entrepreneur to seek online services being offered by all the ministries and departments of government of India. it replaces old method of registration of MSME by filing EM-I / II.

Common Questions On Proprietorship Formation Online

Q. What is a sole proprietorship?

Ans : A sole proprietorship is a the simplest form of business, which you will find all over world. Its like you woke up today and want to sell grocery, and you purchase goods from a wholesaler and start selling them instantly. You have created a proprietorship, No registration is needed. In case you need to open a bank account approach your nearest bank account and open a current account with them.

Q. How are sole proprietorships treated for tax purposes?

Ans : As there is no difference between the business and its owner in case of proprietorship, Unlike corporations, sole proprietorships are not treated separately for the income tax purposes. This means that any profit derived from your sole proprietorship is treated as your personal income and is accounted for on your individual tax return. Any such income is taxed to you in the year it was received or accrued to you. The business income shall be shown as separate income in the income tax return of the proprietor.

Q. How To Establish a Sole Proprietorship business?

Ans : As Sole Proprietorship can be started at will and it only involves the owner. There is no documentation to be done do start a proprietorship business, However certain decision need to be taken like, What shall be the name of the proprietorship, The address where the proprietorship is being established, What activity it shall undertake etc, Based on the answer to above questions the further registration and licenses shall be suggested by setindiabiz startup specialists.

Q. Is it difficult to open a Bank Account for proprietorship?

Ans : Opening current account in the name of the owner of the proprietorship firm is very easy, all they need is Know your customer (KYC) Documents of the proprietor. However if the bank account is to be opened in the name of the proprietorship then bank need two entity proof in the name of the firm. Setindiabiz Specialist shall be able to assist you for opening the account.

Q. Am I personally liable for my business under a sole proprietorship?

Ans : Yes. Unlike other incorporated business forms, you are personally liable for any of your sole proprietorship's debts or legal judgments against your business. This means that in order to satisfy debts owed by your business, debt collectors can come after your personal assets, homes, cars, etc. For this reason alone, you should be extremely cautious about setting up a sole proprietorship. recommends One Person Company in place of proprietorship.

Q. Do I need an attorney to help me start a sole proprietorship?

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