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Sole Proprietorship Registration

The simplest form of Business in India

Start your business as a proprietorship quickly within one day. All you need is MSME (Udyam Registration) & GST Registration to start the proprietorship business. For a single owner, the proprietorship is the simplest form of business and the easiest to create.

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Start a Proprietorship Firm
Select Suitable Package Format

Basic

Includes essential services required for setting up a Proprietorship Firm. Inclusions are

₹ 2,999/-

  • GST Registration
    ? GST Registration is necessary to supply goods or Services, and it is mandatory to carry out interstate trade even if the turnover is low. For any international business, the GST is required from the beginning itself.
  • MSME Registration
    ? When a proprietorship gets registered as MSME, also known as Udyam Registration, it is entitled to several benefits from the government, including but not limited to 50% concession in filing IPR applications.
  • Free Consultation
    ? Startups may have several queries concerning regulations and taxation of business. We offer a free consultation to support the budding entrepreneur.
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Silver

You need to comply with GST & TDS Provisions irrespective of the size or scale of your business.

₹ 11,999/-

  • Everything from Basic Pack +
  • GST Return for One Year
    ? GST Return filing is mandatory for all registered taxpayers, and you get twelve months of our GST Return Filing Service.
  • TDS Return for One Year
    ? The deduction and payment of TDS on eligible payments is a statutory requirement of law. The TDS Compliance includes payment of monthly TDS within its due date and filing quarterly TDS Returns. Unde the Gold Pack, you get twelve months of TDS Compliance.
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Gold

Go digital with Cloud-Based Accounting & GST Software. We assist in implementation and Training.

₹ 16,999/-

  • Everything from Silver Pack +
  • Zoho Books Customisation
    ? Cloud-based accounting has several benefits; we customise the Zoho Books to suit your business requirements.
  • Training & Support (3 Months)
    ? We extend Training and support to the accountant or admin of your firm for three months.
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Noted: The Proprietorship Firm Is Suitable For Small Business With 100% Indian Citizen Ownership. NRI/PIO Can Start A Proprietorship Firm on Non-Repatriation Basis. Foreigners And Non-Citizens Are Not Allowed To Form A Proprietorship.
Table Of Content
Start Your Own Proprietorship Easily
The sole proprietorship formation is straight forward. There is no formal registration required. The sole proprietorship is owned and managed by a single owner; no separate deed or agreement is made. However, individual tax or local registration would be required based on the business activity and the business location. Here is the list of the most common registration for the proprietorship.
Shops and Establishment Act: The registration with the labour department under the shops & establishment act is mandatory in all states; the applicability, government fee and registration process differ from one state to another.
Professional Tax: Except in the north Indian states, almost every state imposes a tax on the profession. You should check its applicability and enrol the entity and, when employing staff, also obtain registration as an employer under PT.
MSME Registration (Also known as Udyam or Udyog Aadhar): The MSME Act provides several benefits to micro, small and medium enterprises. The registration under MSME is Aadhar Based & easy to do. We recommend every eligible business register under the MSME
GST Registration: GST is a tax on the supply of goods and services and applies when turnover crosses Rs. 40 Lakh in case of goods and Rs. 20 Lakh in case of services. To comply with GST, registration is mandatory.
Intellectual Property Registration: The IP Rights are considered the most valuable business rights in modern times; the startups must take steps to safeguard their trademark, copyright, design & inventions by filing registration In India at the earliest.

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Step Wise Process & Over All Cost.

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Comparison Of Proprietorship With One Person Company
Feature ⇓ Sole Proprietorship One Person Company
Meaning

The word sole denotes single, and proprietorship is for the ownership. The sole proprietorship is the most common form of business for tiny business in India, where a single individual owns & controls it.

The OPC is a fusion of sole proprietorship and the corporate form of business. The Companies Act, 2013, for the first time, introduced the OPC to enable a single person to open a company with a simplified compliance regime.
Registration

No formal registration of sole proprietorship is required as there is no specific law of parliament or state that regulates the proprietorship business. That is why it is so simple to start and manage.

A one-person company is incorporated under the Companies Act, 2013. The process is simple and online. Only one person is required to start the OPC.
Distinct Legal Entity

A sole proprietorship firm is not a separate legal entity from that of its proprietor. The proprietor and the proprietorship is the same thing.

OPC is a separate legal entity, and the shareholder/director of the OPC are different from that of the OPC.
Liability

The proprietor is personally liable for all the liabilities and debts of the business. To pay off these liabilities, the personal properties of the proprietor can also be attached.

In an OPC the single shareholder is not liable for all the liabilities or debts of the company, and instead, he/she is responsible for paying only the sum which may be outstanding from her subscribed share capital.
Number of Members

A single Individual can start a Sole Proprietorship Firm, where he alone will invest all the capital and shall be entitled to all the profits of the firm.

The OPC can be owned by only one Individual, also known as the sole shareholder. However, the sole owner of the OPC has to nominate another person to become his or her nominee.
Minimum Capital

You can start the proprietorship firm with any amount of capital. It means there is no minimum or maximum capital prescribed as such for a proprietorship firm.

There is no prescribed minimum capital as such. It means you may incorporate an OPC with any capital as you desire. After the 2021 budget, there is no limit on maximum capital.
Succession

The proprietorship business lacks the benefit of perpetual succession. With the demise of the proprietor, the firm also ends its life. The proprietor and the proprietorships are one and the same.

The OPC is recognized as a separate legal entity in the eyes of the law and the business is transferred to the nominee after the demise of the proprietor.
Separate Property

As there is no distinction between the the owner (proprietorship) and the sole proprietorship firm as such, the firm can not own property or assets in its name.

An OPC being a separate legal entity is capable under the law to own the property in the name of one person company.
Benefits Of Proprietorship Form Of Business
Start-Business1

Start Business in One Day

Proprietorship formation is the easiest among all other business forms, and that you can start within one working day.
100-Percent-Online-And-Easy-Process

100% Online Process

We help small business to start their business in an entirely online environment and without any hassle.
Perpetual-Succession

Ease of Compliance

The compliance requirement is significantly less, and there is no need to get the accounts audited or file any annual return.
Ease-Of-Compliance1

Limited Liability

The compliance requirement is significantly less, and there is no need to get the accounts audited or file any annual return.
Tax-Advantage1

Limited Liability

As the taxable income forms part of the Proprietor’s ITR, The benefit of slab based income tax is available to proprietorship.

Fdi-Is-Allowed1

Easy To Close

There is no specific process to close the proprietorship firm. Surrender all registration and licenses and close business.
Checklist On Minimum Requirements To Start Proprietorship
1
Indian Citizenship: The proprietorship business is available exclusively to the Citizens of India. The FDI is not allowed in it, hence to start a sole proprietorship we need Indian Citizen capable of entering into contracts (Above 18 Years of age)
2
Business Address: The business can not be run from a residential address as per local municipality laws, hence for GST Registration, the Goods and Services Tax Department insists on the commercial premises of premises where mixed land use is permitted.
Business-Address
3
Capital Requirement: The sole proprietorship business is not separate from the Individual Proprietor, and There is no separate recognition of the assets of the business or that of the proprietor. Hence you do not have to worry about capital requirements. Invest as per requirement.
4
New & Unique Name: The name of the proposed new business should be unique and eligible; we advise you to check the proposed name in the database of the trademarks before its adoption
Name-Search
Documents & Fee Required To Start A Proprietorship Firm
A. DOCUMENTS OF THE OWNER B. BUSINESS ADDRESS PROOF
  • Colour Photo - Two
  • Aadhar Card
  • PAN card
  • Cancelled Cheque
  • Address Proof (Voter ID, Driving License, Passport, Bank Statement, Electricity Bill).
  1. Electricity Bill, Property tax receipt, Sale Deed, Registered Rent Agreement.
  2. It should not be older than two months.
  3. NOC from the Owner of Premises
  4. Download NOC Format
  5. Download Questionnaire
After successful payment, please download the questionnaire, fill it and send it to us at help@setindiabiz.com along with the list of documents for further process.

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Step-Wise Process To Start A Sole Proprietorship Business
Start your business as a proprietorship quickly within one day. The process begins with the online order at setindiabiz. Once the order for proprietorship setup is processed, we will initiate the documentation and further process. As said earlier, the process is entirely online, and there is no need for you to visit our office. Please do contact us for any clarification.

  • Documentation

    The process starts with documentation of the proprietor and the place of business where the firm shall carry out its business, ensuring that the documents are updated and correct. Please share the filled questionnaire and all documents at help@setindiabiz.com, quoting your order details.

  • Selection of a Unique Name

    The first thing is to select a unique name for your proprietorship business. The starting point should be to search the business's proposed name in the trademark register to avoid infringement on someone else's trademark. Click here to learn more about the trademark.

  • MSME - UDYOG Aadhar / Udyam

    For opening a bank account, there is a need for two documents in the proprietorship name. One of the registrations could be Udyog Aadhar, enabling an entrepreneur to seek online services offered by Government Departments apart from various other benefits under the MSME Act.

  • GST Registration

    You may not supply goods or services all over India unless the proprietorship firm obtains GST Registration. However, if you are doing business only within the state, GST is not required until the turnover of Rs 40 lakh in case of Goods and Rs 20 Lakh in case of services is reached. Click here to learn more on GST Registration.

  • Other Tax Registrations

    Based on the business, the proprietorship firm may obtain TAN, IEC and PT Registration. The TAN is required to comply with TDS provisions; IEC Cose is necessary for import and export business. Some states impose a professional tax, and thus, PT enrollment and registration may be required.

Taxation Of Sole Proprietorship
The proprietorship is not considered as a separate entity in law, and the income of the proprietorship firm is added in the ITR of the proprietor itself. In other words, no separate ITR is filed for the proprietorship firm. The Individual slab based taxation of 5% to 30% based on the income is applicable. The deduction under section 80C to U is also available on the income of such proprietor. For the FY 2021-22, the Individual tax rate slab is as under.
Under New Income Tax Regime U/s 115 BAC
S.No Total Income Tax Rate
1
Upto Rs. 2,50,000
NIL
2
Rs. 2,50,000 To Rs. 5,00,000
5%
3
Rs. 500001 to Rs. 7,50,000
10%
4
Rs. 7,50,001 to Rs. 10,00,000
15%
5
Rs. 10,00,001 to Rs. 12,50,000
20%
6
Rs. 12,50,001 to Rs. 15,00,000
25%
7
Above Rs. 15,00,001
30%
Under the old Income Tax Regime
S.No Total Income Tax Rate
1
Up to Rs. 2,50,000
NIL
2
Rs. 2,50,000 To Rs. 5,00,000
5%
3
Rs. 5,00,000 to Rs. 10,00,000
20%
4
Above Rs. 10,00,001
30%

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Frequently Asked Questions
A sole proprietorship firm is the oldest and simplest form of business owned and controlled by a single individual. The owner of the proprietorship firm is known as the proprietor. The proprietor alone invests the entire capital and is thus entitled to all the sole proprietorship firm’s profits. The liability of the sole proprietor is unlimited to its business, and as such, there is no separation between him and his business.
A sole proprietor is the absolute owner of a Sole Proprietorship Business. Any person who is above 18 years of age and who is otherwise capable of entering into a lawful contract is eligible to start a business as a proprietorship. The option to create a proprietorship is available to Indian Citizens only, and Foreign Citizens are strictly not allowed to set up or operate a proprietorship firm. However, an NRI and OCI are permitted to establish proprietorship firms subject to no repatriation of their profits.
Ease of formation is the most significant feature of the sole proprietorship form of business. There is no prior registration required to start a proprietorship firm. Similarly, after starting the business, no law makes it mandatory to register the sole proprietorship. No agreement, deed, or documents are to be prepared for creating a proprietorship, and the firm’s registration is also not required.
Except for the proprietorship, there is a regulating act for different business forms, such as partnership Act 1932 for the partnership business, LLP Act, 2008 to regulate the Limited Liability Partnerships. The company law regulates the companies for a long time, and the most recent law on the subject matter is the Companies Act, 2013. LLP & Companies comes into existence after a certificate of incorporation is issued by the ROC, whereas there is no such requirement of prior registration for proprietorship firms.
We have created a comparison table for easy understanding of differences between different forms of business; Please refer to the same by clicking here. Compare Forms of Business
A proprietorship business can be started with any amount of capital, and as such, there is no provision in the law that prescribes any minimum capital for the firm. The proprietor must infuse the firm’s money based on the nature and scale of the proposed business. You shall have the ability to introduce or withdraw capital at any time from the accounts of the proprietorship business as drawings.
No, A proprietorship business is owned and controlled by a sole person. There is no requirement to engage any other person to start a proprietorship business.
The Bank Account opening is regulated by the Reserve Bank of India, which has prescribed submission of at least two entity proofs for the proprietorship. To open a bank account, you may approach any bank nearest to you, and generally, they need the following documents. Please click here to read our article on the List of required documents for the proprietorship firms’ opening bank account.
Yes, the proprietorship can be converted to LLP or Private Limited Company. However, the conversion process is complicated, and unless it is not necessary due to existing contracts or IPR, we do not advise going for the conversion.
There is no certificate of registration or incorporation for proprietorship business as such. The legal identity of proprietorship as an entity is determined through various other registration or licenses obtained in the proprietorship firm’s name on a case to case basis. Similarly, each specific registration shall result in issuing a certificate of registration, for example, GST Certificate, MSME Registration Certificate, Tan Allotment Letter, etc.
No law enforces the registration of a proprietorship firm. SETINDIABIZ helps entrepreneurs secure registration under MSME, GST, Shops & Establishment, etc. The MSME registration is done under The Micro, Small and Medium Enterprises Development Act, 2006 of Central Government.
Yes. Only an Indian Citizen can start a proprietorship business. Similarly, no foreign funding is allowed in a proprietorship form of business. However, an NRI or a Person of Indian Origin (POI) can invest in proprietorship because the firm’s profits shall not be repatriated out of India.
As there is no difference between the business and its owner in the case of proprietorship, Unlike corporations, sole proprietorships are not treated separately for income tax purposes. This means that any profit derived from your sole proprietorship is treated as your income and is accounted for on your 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.
The sole proprietorship is established at the proprietor’s will and to start the same all you need is the PAN Number of the proprietors, the same shall be treated as the PAN of the proprietorship firm. Open a current bank account, and you are ready to do business. We recommend the protection of the Trademark of a proprietorship firm. Based on the turnover of your business GST may apply to business.
Opening a current account in the name of the proprietorship firm owner is very easy; all they need is to know your customer (KYC) Documents of the proprietor. However, if the bank account is to be opened in the name of the proprietorship, then the bank needs two entity proof in the firm’s name. Setindiabiz Specialist shall be able to assist you in opening the account.
Yes. Unlike other incorporated business forms, the liability of the proprietor is unlimited to the sole proprietorship. The proprietor’s unlimited liability means that debt collectors can come after your assets, homes, cars, etc. For this reason alone, you should be extremely cautious while setting up a sole proprietorship. Setindiabiz.com recommends
We strongly recommend a consultation with our startup specialists, which is free and is available without any obligation to take our services. As every business is unique and there may be circumstances where a partnership, Limited Liability Partnership (LLP), Private Limited Company or some other kind of business structure is a better fit. You also may want to get more insight into the specific liabilities your sole proprietorship may face.
Yes, a proprietorship firm is a legal form of business and fully recognised by e-commerce platforms such as Amazon and Flipkart. You can very well enlist your proprietorship firms with the marketplaces.
Both the proprietorship and one person company is a venture owned by a single owner; the proprietors are liable for all the business’s debts, whereas the OPC protects limited liability to its shareholders.
Yes, a proprietor is an individual and can be appointed as a director of a private limited company without any problem.
Important Articles On Proprietorship Formation and Tax Aspect
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