Sole Proprietorship stands out as a highly favored business establishment in India. Surprisingly, government registration isn't mandatory for this business model, although opting for registrations like MSME, shop establishment, and GST is advisable. The beauty of a sole proprietorship lies in its simplicity – it requires minimal documentation and formalities, making it an effortless pathway to venture into business. Obtain an explanation of the registration process for a Sole Proprietorship company in India, covering all the essential details.
In a sole proprietorship business, a solitary owner shoulders the responsibility of management, brings in all profits, accepts financial losses, and fulfills tax obligations personally. Typically, sole proprietors operate under their own names, as there's no obligatory requirement to establish distinct business names or trade identities.
Advantages of a sole proprietorship:
A sole Proprietorship can be registered using three different methods:
The registration of sole Proprietorship under the Shop Establishment Act includes a specific set of guidelines. To begin, it’s essential to determine which entities classify as “shops.”
Under this legal framework, establishments such as factories, cafeterias, restaurants, residential hotels, theaters, and other public entertainment venues are excluded from the “shop” category.
Premises eligible for shop registration includes:
Given that the rules of the Act can vary from state to state, it is strongly recommended to consult the provision of the Act as detailed by the registrar’s office in the relevant jurisdiction. The registration process generally follows these steps:
Udyog Aadhaar is a special identification number issued by the Ministry of MSME (Micro, Small & Medium Enterprises) to business owners. It is a new way of registering businesses, replacing the old EM-I and EM-II forms. A sole proprietor can apply for Udyog Aadhaar with the Ministry of MSME and get benefits such as bank loans, subsidiaries, and reimbursements. He also gets a unique identity for his business, which is called Sole Proprietorship registration.
The registration process for Udyog Aadhaar is easy and simple. New Entrepreneurs who are not registered as MSME can follow these steps to register:
After submission, you will get a message for the successful submission of your Form and will get your certificate after verification and completion of the registration process.
To get GST for your Sole Proprietorship, follow these steps:
You will receive ARN (Application Reference Number) on your registration email and mobile number.
After your GST application gets approved, you will get your GSTIN and a registration certification.
If you are a Sole Proprietor, you have to comply with the following tax obligations:
There is no GST registration fee in India. The government of India allows you to register as a GST taxpayer for free on its official website. Whether you are a proprietor, an individual, a company, or a partnership, you do not have to pay anything for GST registration.
If you're a sole proprietor in India, you must enroll for GST if your yearly turnover goes beyond Rs. 20 lakhs. Nevertheless, even if your turnover is below Rs. 20 lakhs, you have the option to voluntarily register for GST.
The sole proprietorship firm doesn't receive a distinct PAN card like a company since it lacks an independent legal identity. Instead, a sole proprietorship is directly associated with its owner or proprietor. Consequently, the proprietor has the option to utilize their personal PAN for conducting business under the sole proprietorship.
The sole proprietorship doesn't possess legal status; rather, it designates an individual who possesses and assumes personal liability for the business's financial obligations. This form of business can function using the proprietor's name or opt for a fictitious name when conducting operations.