Sole Proprietorship Firm

It is the simplest form of business ownership where the entire business is owned and managed by a single person. The business itself does not have a separate legal identity, i.e. the businessperson and the business are the same in the eyes of law. The sole proprietor is entitled to all the profits of the business but also has unlimited liability for all losses and debts.

An Indian National with a current bank account on a business name is eligible for forming a sole proprietorship Firm. Generally, banks ask a customer for a Shops and Establishments license prior to opening a current bank account.

There is no requirement of minimum capital prescribed to register a sole proprietorship and the business can be started with any amount of capital as per the discretion of the owner.

After submission of all the required documents & information, the MSME usually takes 2 to 3 working days to respond to our application. On an average it takes 7 to 8 working days to complete the registration process & immediately after that you can start your business.

A sole proprietor has unlimited liability towards the business as a sole proprietorship is not a separate legal entity.

A sole proprietorship Firm is most suited for unorganized sectors with preference given by small and micro businesses such as grocery vendors, fast food vendors, etc.

The key advantages of a sole proprietorship firm are less compliance, Ease of start, Less Tax and less costing.

As per RBI norms, to open a bank account for sole proprietorship, the following documents are required - PAN, two forms of registration, identity proof like Aadhar or Voter ID and address proof like mobile bills or electricity bills. The two forms of registration can be either of the following - Shop & Establishment Act Registration, MSME registration, professional license, Chartered Accountant Certificate, GST Registration or any other form as per the KYC norms of the Reserve Bank of India or as per the requirements of the respective banks.

No. A sole proprietorship firm does not have any government-mandated registration requirements. The registration of this type of business entity is usually obtained by the acquisition of registration related to tax under the business name.

Yes, a sole proprietorship can be converted into a partnership or a private limited company if the proprietor wishes to do so at a later stage of business. However, the process is complex and involves a lot of paperwork. Therefore, it is advisable to set up a partnership or private limited company at the first stage itself, if the business owner is looking for investment and expansion.

As per tax laws, the income from a sole proprietorship firm is treated as the personal income of the sole proprietor as a sole proprietorship is not a separate legal entity.

For starting a proprietorship firm, you need only one person is required and it has only one promoter.

It is not necessary to prepare audited financial statements each year. However, a tax audit may be required based on turnover and other criteria.

Yes, you can convert your Proprietorship Firm into a Pvt. Ltd. Company or LLP. The Procedure is a little complex.

No, the proprietorship registration process is completely online. So, the business owner or proprietor is not required to visit physically at any place. All required documents & information can be sent through e-mail or uploaded on our portal for filing. Self-attested scanned copies of all documents & relevant information are required along with your authorisation to submit an application before the authority on your behalf. All the forms are filed online on the MSME web portal, application & documents are digitally signed & submitted before the authority for approval.

Once, your proprietorship is registered, you should complete below-mentioned requirements:

• The opening of the firm’s current account
• Apply for GST Certificate
• TAN registration, if applicable
• Apply for relevant licences under Shop & Establishment Act, FSSAI etc.

For a Sole proprietorship registration in India, the following things must be required:

• An individual as the sole owner/proprietor
• A place of business in India must be provided as a registered office address.
• Utility bills such as electricity bills/mobile bills
• Rental agreement/property deed
• KYC documents such as copy of PAN card & Aadhaar card of the proprietor
• E-mail id & Mobile number
• Current account in bank

A proprietorship business cannot be transferred to another person. Only the assets of the business can be transferred to others through sale. Intangible assets like government approvals, registrations, etc. cannot be transferred to other people unlike a private limited company or a limited liability partnership.

A sole proprietorship firm has to file annual tax returns with the Income Tax Department. The firm may have to file GST returns if the annual turnover exceeds 20 lakhs or doing an online business. However, compliances like filing annual reports and accounts with the Ministry of Corporate Affairs are not required. Those compliances only apply to the private or public limited companies. The proprietorship may have to file TDS returns, if applicable.

No. Sole Proprietorship is a business owned, managed and controlled by a single person. This type of business cannot issue shares or get investors. For trading shares or seeking funds, the sole proprietorship must first convert to a Private Limited Company.