Sole Proprietorship
Registration Online in India

Get your Sole Proprietorship Registration online in just 10 days

A Sole Proprietorship is a type of organization you can set up to run your business. As such they need to be registered with the Ministry of Corporate Affairs (MCA) and are subject to relevant Rules and Regulations

Register your company at just ₹3,000, in India

(govt fees + tax extra)

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Steps for registering a Sole Proprietorship

Step 01

Prerequisites & Document Preparation

Gathering the KYC documents required for registering your business.

Step 02

Firm Name Submission & Approval

Finalizing a unique trade name for your business

Step 03

Director Registration & Digital Signature

Registration of directors with MCA & creation of Digital Signature.

Step 04

Business Legalization

Obtaining Udyam Registration to establish a recognized legal identity and unlock MSME financial benefits.

What is a Sole Proprietorship?

Sole Proprietorship Business is an unincorporated business that is owned and managed by a single person.

As the business and the owner are not legally separate, it is the simplest form of business structure. It is also known as individual entrepreneurship, sole trader, or simply proprietorship.

The business owner, also known as a proprietor or a trader, conducts business using their legal name. They may also choose to do business using another name by registering a trade name with their local authority.

This type of business is the easiest and cheapest form to start. For this reason, it is common among small businesses, freelancers, and other self-employed individuals.It is not necessary for a sole proprietorship to be registered with any statutory Law like Company Law / LLP Law / Partnership Act etc.

Proprietorships are recognized by other registrations, such as a Service Tax registration or GST or MSME or Shop and Establishment Act.

Features of Sole Proprietorship

Sole proprietorships are the simplest form of business structure and are easy and cheap to start due to few government rules.
Proprietors enjoy full control and profits from the business but incur unlimited legal liability personally.
Sole proprietorships are limited by the amount of capital available, the ability to get outside assistance, and a potential shortfall of needed skills to be successful.

Importance Of Registration

Benefits of sole Proprietorship

i) The easiest and cheapest way to start a business

The process of establishing a sole proprietorship is generally an easy and inexpensive process, unlike forming a partnership or a corporation.

Compared to other business forms, there is very little paperwork a proprietor needs to file with their local authorities. As a result, proprietors do not have to wait long before they have permission to carry on a business.It can be set up and become operational within as little as 15 days.

The start-up fees are also low, in line with many government policies that encourage entrepreneurs to take risks and grow the economy by minimizing the friction of starting new businesses.

ii) Few government rules and laws

There are very few government rules and regulations that are specific to proprietors. Sole proprietors must keep proper records, file, and pay taxes on the business income and other personal income sources.

iii) Full management control

Proprietors control all aspects of their business, including production, sales, finance, personnel, etc.

iv) Flow-through of business profit

There is no legal separation between the owner and the business, so the owner gets 100% of the profits.

Registration Conditions

For a Sole Proprietorship business, registration is not required as it is identified through alternate registrations, such as GST registrations. However, its liability is unlimited and it also doesn't have perpetual existence.

Obtain an Aadhar card.
Apply for a Pan Card
Open a bank account in the name of the business for the proposed sole proprietorship
Secure a Shop and Establishment Act License
Register under GST.

Incorporation Process

There is only a requirement of opening a bank account in the name of the proprietorship firm or obtaining the licenses required for conducting the business.

A certificate/license issued by Municipal authorities under the Shop & Establishment Act.
The license issued by Registering authority like the Certificate of Practice issued by the Institute of Chartered Accountants of India.
The registration/licensing document issued in the name of the proprietary concern by the Central Government or the State Government Authority.
The banks may also accept the IEC (Importer Exporter Code).
Complete Income Tax return in the name of the sole proprietor.
The utility bills such as the electricity, water, and landline telephone bills.
Issue of GST Registration/Certificate.

Documents Required

Documents Required For Sole Proprietorship Registration

You need to have the following set of documents for proprietorship registration in India:

Copy of PAN card of proprietor (self attested)
Copy of address proof of proprietor (self attested)
Authorization Letter approving Targo Legal to appear on Behalf of you (we will prepare)
Signed copy of Proprietorship Charter (we will prepare)
Copy of Rental Agreement of premises.
E-mail Address and mobile number of the Proprietor

Compare your options before incorporation of company

An introduction about a business or start up formation option is vital for deciding the right form of business registration. The Companies Act, 2013 and Limited Liability Partnership Act, 2008 have brought about more business formation choices for entrepreneurs.

The key factors that influence the legal form of a business are, the nature of your business, customer's profile (corporate, small businesses or individuals ), expected business turnover, scalability of your business idea, and future funding prospectus.

Every entrepreneur/promoter should take the effort to know about the pros and cons of these legal forms for new company registration so as to choose the best for your Company.

We at Targolegal also offer Private Firm, LLP, OPC registrations, and many more services that may suit your registration requirements.

Feel free to contact us for details regarding the Registration Cost of Sole Proprietorship, and to know more about, how to register a company.

Private Limited Company Limited Liability Partnership Partnership One Person Company (OPC) Sole Proprietorship

Do I need a Registration?	Yes, Ministry of Corporate Affairs registers Private limited company under the Companies Act, 2013
What type of business names can I keep?	Firstly, submit a set of names to Registrar of Companies, wait for approval from Registrar. Best practice is that the names submitted must be inoffensive, legal and not similar to any registered LLPs or companies
How risky is it for me?	Private Limited Company is a separate legal person in the eyes of law, registered under Companies Act 2013. So, the shareholders are not responsible for business liabilities.
To what extent is each member of the business liable?	Liability is limited to his/her share capital contribution.
Tell me the minimum membership limit	2 People
Is foreign ownership allowed?	Yes
How much will I get taxed	Profits get taxed at 25% plus cess and surcharge. Is applicable if profit exceeds 1 Cr
What are my annual tax filing norms?	Every financial year Private Limited Company must file Annual Accounts and Annual Return with the Registrar of Companies. Plus, Income Tax must be filed separately.
Is Annual Audit Required?	Statutory audit is to be conducted irrespective of business transaction and turnover. Income tax audit is applicable if turnover exceeds 2 Crs
Can I convert my business into any other legal form?	Yes, Private Limited Company can be converted into a Public Company or LLP. Even, Public Limited Company can be converted into a Private Limited Company.
Compulsory Conversion to Private Limited Company Applicable?	NO

Do I need a Registration?	Ministry of Corporate Affairs registers an LLP business under the Limited Liability Partnership Act, 2008.
What type of business names can I keep?	Firstly, submit a set of names to Registrar of Companies, wait for approval from Registrar. Best practice is that the names submitted must be inoffensive, legal and not similar to any registered LLPs or companies
How risky is it for me?	"LLP" is a separate legal person in the eyes of law, registered under LLP Act 2008. So, the partners are not responsible for business liabilities.
To what extent is each member of the business liable?	Liable to the extent of their contribution (in money, in kind or in services extended) to the LLP
Tell me the minimum membership limit	2 People
Is foreign ownership allowed?	Yes
How much will I get taxed	Profits get taxed at 30% plus cess and surcharge. Is applicable if profit exceeds 1 Cr
What are my annual tax filing norms?	Every financial year Annual Statement of Accounts & Solvency and Annual Return with the Registrar Plus, Income Tax must be filed separately.
Is Annual Audit Required?	Statutory audit is to be conducted if partners contribution exceeds 25 lakhs or turnover exceeds 40 lakhs. Income tax audit is applicable if turnover exceeds 2 Crs
Can I convert my business into any other legal form?	Yes, Private Limited Company can be converted into a Public Company or LLP. Even, Public Limited Company can be converted into a Private Limited Company.
Compulsory Conversion to Private Limited Company Applicable?	NO

Do I need a Registration?	Yes, Register with Registration of Firms
What type of business names can I keep?	Firm can use any name that he likes, but avoiding names already trademarked is advisable
How risky is it for me?	Partners will stand liable for the liabilities of the business
To what extent is each member of the business liable?	Unlimited liability
Tell me the minimum membership limit	2 People
Is foreign ownership allowed?	No
How much will I get taxed	Profits get taxed at 30% plus cess and surcharge. Is applicable if profit exceeds 1 Cr
What are my annual tax filing norms?	Only Income Tax must be filed for the income of firm and partners.
Is Annual Audit Required?	Only income tax audit is applicable if the turnover exceeds limit of 2 Cr
Can I convert my business into any other legal form?	Yes, Partnership can be converted into a Private Limited Company or LLP
Compulsory Conversion to Private Limited Company Applicable?	NO

Do I need a Registration?	Yes, Ministry of Corporate Affairs registers One Person Companies under the Companies Act, 2013
What type of business names can I keep?	Firstly, submit a set of names to Registrar of Companies, wait for approval from Registrar. Best practice is that the names submitted must be inoffensive, legal and not similar to any registered LLPs or companies
How risky is it for me?	OPC is a separate legal person in the eyes of law. So, the share holder is not responsible for business liabilities.
To what extent is each member of the business liable?	Liability is limited to his/her share capital contribution
Tell me the minimum membership limit	1 Person
Is foreign ownership allowed?	NA
How much will I get taxed	Profits get taxed at 25% plus cess and surcharge. Is applicable if profit exceeds 1 Cr.
What are my annual tax filing norms?	Every financial year OPC must file Annual Accounts and Annual Return with the Registrar of Companies. Plus, Income Tax must be filed separately
Is Annual Audit Required?	Statutory audit is to be conducted irrespective of business transaction and turnover. Income tax audit is applicable if turnover exceeds 2 Crs.
Can I convert my business into any other legal form?	OPC could be converted into any legal form. But, it depends on the number of promoters, business operations, funding requirements and other factors. Limited Liability Partnership or Private Company is preferred by promoters when seeking expansion of their OPC
Compulsory Conversion to Private Limited Company Applicable?	NO

Do I need a Registration?	No legal requirement to do so.
What type of business names can I keep?	Promoter can use any name that he likes, but avoiding names already trademarked is advisable
How risky is it for me?	Promoter will stand liable for the liabilities of the business. Because the business is not considered as a separate legal person/entity
To what extent is each member of the business liable?	Unlimited liability.
Tell me the minimum membership limit	1 Person
Is foreign ownership allowed?	NA
How much will I get taxed	Individual income tax slab of the proprietor is the basis of taxation.
What are my annual tax filing norms?	Only Income Tax must be filed on the basis on proprietor's income.
Is Annual Audit Required?	Only income tax audit is applicable if the turnover exceeds limit of 2 Cr.
Can I convert my business into any other legal form?	No
Compulsory Conversion to Private Limited Company Applicable?	Yes, if turnover exceeds 2 cr

FAQ

Who can start sole proprietorship in India?

Any Indian can start a sole proprietorship in India.

How long does it take for proprietorship registration?

It takes around 10 working days to complete the registration process.

What is a sole proprietorship?

It is a type of business model that is owned and controlled only by one person.

Can the sole proprietorship use any name?

A name can be used for the sole proprietorship as long as it is not offensive to carrying out the business.

How can Targo Legal help me with proprietorship registration?

At Targo Legal, we have a dedicated team to help you with the registration process from the start to the end.

What is a sole trader and a sole proprietor?

Both the words sole trader and sole proprietor will include an individual that carries out the affairs of the sole proprietorship business.

Can a sole proprietorship be converted to a limited company?

Yes the business of a sole proprietorship can be converted to a company. The registrar of companies has to be informed about this.

Is it mandatory for a sole proprietor business to be registered?

No it is not mandatory for the business of a sole proprietor to be registered. However, during financing process, banks may insist sole proprietor businesses to be registered.

Can a sole proprietor hires employees?

Yes employees can be hired for sole proprietors. Small scale business entities and MSMEs get major work done through employees and labourers. There is no limit on the amount of work force that can be employed in a MSME.

Can FDI be allowed in a Proprietorship firm?

Yes Foreign Direct Investment is allowed in a sole trader firm. However, there are specific conditions which have to be followed for receiving foreign direct investment under sole proprietorship registration.

Are there any disadvantages of running a sole trader business?

Yes, the main disadvantage is the principle of limited liability would not be applicable to this form of business entity. Apart from this, the liability of the business falls on the sole owner of the business.

How to register a proprietorship?

You need to select a name and address for your business and get it registered with the concerned Registration Authority, open a current account in a bank and start your business. You can also contact us for any support during the registration process.

Can the name be changed for a sole proprietorship firm?

Yes the name can be changed for a sole proprietorship business. The change of name has to be intimated to the public through public and government notices. Apart from this the sole trader has to inform all the respective parties for the change of name.

Can others invest in my sole proprietorship business?

No, this kind of business is owned and operated by one person only. So, others can’t invest in this business. However, you can transfer to a different business model if you want to accept investors. Nurturelabz can help you with the transfer and the new registration.

Do I have to register for GST for my proprietorship company?

There are numerous conditions for GST registration such as your annual income, products you sell/services you offer, mode of business and more. Consult us and we can help you with sole proprietorship registration as well as GST registration.

When would GST registration be applicable for a sole trader?

Only when the threshold reaches a particular extent then GST registration would be required for the sole proprietor business. This threshold is as follows:

20 Lakh- for service oriented business
40 Lakh- for trading business.

Are there any compliance required after forming a sole proprietorship?

Yes the following compliances are required after forming a sole proprietorship firm:

GST Registration
Financial Documents
Income Tax Returns
Any registrations which have to be carried out under respective authorities.

More questions? Just write us a message