Registration as a sole proprietorship firm

Category: LEGAL
Date: April 6, 2020

Sole proprietorship is the simplest form of business structure in India. As the name suggests, Sole Proprietorship comprises of a single Individual who is running the business/ profession solely.

There are no pre requisite to obtain specific registrations for starting sole proprietorship firm. Also there is no minimum capital requirement by law. Any person desirous of running a business/ profession can start a sole proprietorship firms. But it is advised to obtain following licenses and registrations.

  1. Aadhar- Aadhar is a mandatory document for filling Income Tax Returns, opening Bank accounts and for fulfilment of various other compliances. Aadhar of proprietor will be Aadhar of sole proprietorship firm too. Udyog Aadhar can be obtained in the name of proprietorship firm
  2. PAN- PAN of proprietor will serve as PAN of sole proprietorship business too
  3. Bank account- Though Sole proprietor can use his/her saving bank account as bank account for sole proprietorship firm too but it is advisable to have current account for sole proprietorship firm. This will help the proprietor to segregate business and personal receipts and payments. This becomes necessary if sole proprietorship require various licenses and registration for carrying the business
  4. Shop and Establishment Certificate- This certificate is required as per local laws of the state.
  5. Registration under the MSMED (Micro, Small and Medium Enterprises Development) Act– It is required in case of Micro, Small and Medium Enterprises
  6. Registration under GST- GST registration is required if turnover of all business taken together of sole proprietor is more than specified limits. The limit is 40 lakhs in case of goods and 20 lakh in case of services (reduced limit is applicable for some specified states)
  7. Professional tax- Professional tax needs to be paid as per local law of the state.
  8. Income Tax Return- Income tax return of sole proprietor and sole proprietorship firm is filed as a single entity taking into account all personal and business incomes/ losses