In India, a sole proprietorship is a single person establishment or one-person firm in which an individual owns, manages, controls, implements, and executes his or her own business. Because it is not primarily governed by any law, it is the most convenient way to conduct business in India. It is not required to register as a sole proprietorship, although many people do so in order to receive tax benefits. The profits and losses of a company or business are shared by only one individual who owns the company or business.
A sole proprietorship firm does not require any specific registration, however, the owner is urged to obtain some necessary registrations for the firm’s operational functioning. The following registrations are required for a sole proprietorship firm:
Registration of MSME
It is not required to obtain an MSME (Small and Medium Enterprise) registration, but it increases the business’s prospects of obtaining loans and aids in other legal concerns. The MSME registration process can be completed online at the MSME official website. This is a basic procedure that makes life easier for sole owners.
License under the Shop and Establishment Act
Although a Shop and Establishment Act licence is not required for all sole proprietorship businesses, the majority of them must obtain one in accordance with the local rules of the business’s location. The municipal party issues the Shop and Establishment License. This licence is granted based on the number of employees employed by a business. The registration process varies by state, and business owners must consult the individual state-specific website for registration.
Registration for the Goods and Services Tax (GST).
Registration for the Goods and Services Tax is required only if the yearly turnover exceeds Rs 40 lakh or Rs. 20 lakh for firms operating in the North-Eastern states. If the business owner wishes to sell products online on e-commerce platforms such as Amazon, Flipkart, eBay, and others, a GST registration number is also required. It is vital to know that sole proprietorship businesses are not required to register for GST. Obtaining GST registration would assist the business owner in keeping track of his or her taxation throughout all transactions done in the name of the proprietorship firm.
Proof of Office Address
A registered office address evidence is required for various procedures that are critical to the operation of the firm. If the office is in a rented property, the rental agreement and a letter of authorization from the landlord of the office can be used as proof of address. If the entrepreneur has an office, the municipal corporation’s electricity bill or any other office ownership papers can serve as evidence of address.
The following general documents are necessary for the majority of the types of registrations advised for sole proprietorship firms. Certain sorts of registrations may be exempt from this rule. The owners are recommended to visit the official website of the government organisation issuing the registration to ensure that they have all of the essential paperwork.
The following documents are required to register a sole proprietorship:
The Aadhar card number is required for official registration. This is necessary in order to link the business with the other details associated with the Aadhar card.
PAN (Permanent Account Number) card:
A PAN card is required for proprietorship registration in order to file Income Tax Returns. As a result, obtaining a GST registration number is also required (if applicable)
Account number in a bank: It is necessary to submit the bank account associated with office transactions. If the applicant does not have a separate corporate bank account, this can also be his or her personal account.
Proof of registered office:
Any of the above-mentioned registrations require official office proof. The topic of verification of registered office is covered in-depth above.