"AJSH & Co LLP"    is now    "Mercurius & Associates LLP" "AJSH & Co LLP"    is now    "Mercurius & Associates LLP" "AJSH & Co LLP"    is now    "Mercurius & Associates LLP"

Sole Proprietorship


Proprietorship is a form of entity which is owned, managed and controlled by one person, who is the sole proprietor of the firm. A proprietorship is known by various other names like sole proprietorship, individual proprietorship or sole trader. Sole proprietor has unlimited liability and will be accountable for all the profits earned as well as losses incurred by the business.

Unlike other forms of business, this business setup does not offer the owner a host of benefits like separate legal entity, independent status, corporate existence, limited liability, free transferability or perpetual existence. Registering as proprietorship firm is suitable for small businesses having limited presence. No government fee is involved for registering proprietorship in India.

Our service portfolio includes

  • Acquisition of PAN
  • GST registration and monthly return filings
  • Taxation services (ITR filing)
  • Trademark registration
  • Registration under Shops and Establishments Act
  • Winding up of proprietorship by surrendering all registrations

General requirements for registering as a sole proprietor in India
Below listed are few requirements for registering proprietorship firm:

  • Permanent account number (PAN): For the purpose of filing income tax returns, undertaking transactions and opening of bank account, PAN card is required. PAN card application can also be made online. There is no separate PAN card issued to proprietorship as it can be registered with owner’s personal PAN itself.
  • Proprietor: A proprietor should be an Indian citizen and resident.
  • Current account: For opening a current account in name of proprietorship, banks generally require Shops and Establishment Registration / GST Registration, or any registration/ licensing document issued by the Central Government / State Government. There are certain advantages of using current account for business, some of them are:
  • Tracking of personal and business transactions separately.
  • Such account can be used as proof of running business.
  • In case of additional funds required for day-to-day operations of the business, overdraft facility can be availed from bank.
  • GST number: In case of turnover exceeds INR 40 lakhs in case of only Goods and INR 20 lakhs in case of Goods and Services, in a financial year, business is mandatorily required to get registered under GST.

Procedure for registering as proprietorship in India
A proprietorship is not required to undertake any government registration. However, various tax registrations as per standard rules and regulations are required such as GST registration can be obtained in the name of proprietor or proprietorship to exhibit that the owner is maneuvering the business as a sole proprietorship. Following steps are undertaken for registering the proprietorship:

  • Name selection: The name selected should not resemble any registered trademark. There are no regulations for registering the name of a proprietorship, hence to make it exclusive you can get a trademark registration done in the name of your business.
  • Micro, small and medium enterprises (MSME) Udyam registration: Udyam Registration Number is a 12-digit number provided by MSME government of India. It provides a gamut of advantages from the government such as loans, subsidiaries, schemes, etc. Registration for Udyam can be made on Udyam Registration portal. Udyam registration is Aadhaar based, so it is mandatory to have Aadhaar card for the registration.
  • GST registration: Application for GST registration can be made on GST portal and is mandatory in case turnover exceeds INR 40 lakhs in case of only Goods and INR 20 lakhs in case of Goods and Services, in a financial year.

Benefits of registering as proprietorship in India

  • Easy initiation: Registering proprietorship in India is a facile process as it requires nominal registration. It is considered as one of the simplest forms of business entity to proceed with the initial phase of the business. No legal formalities like board meetings or ROC filings are required by proprietorship firms.
  • Simplified layout: The layout of proprietorship firm is simple. There is no requirement of any specific location or setup for executing business operations. Residential space can also be used in case no proper office setup is present.
  • Tax reliefs: A sole proprietor enjoys maximum benefits. Returns of proprietorship can be filed in personal name there is no need of filing them separately. Also, income tax on income less than INR 5 lakhs is exempt.
  • Individual promoter: A director or nominee is not required when registering as a sole proprietor in India. Only proprietorship setup is a legal entity which is managed by a single person as compared to one person company (OPC) mandatorily having one director.
  • Capital requirement: No minimum capital obligation is required for starting such business as per any law. Capital can be introduced depending upon the nature and size of the business.
  • Certificate of incorporation (COI): COI is not required in case of registering as a sole proprietor. Legal existence of proprietorship in the eyes of law is determined by various other licenses or registrations obtained in the name of proprietorship firm, for instance, Goods and services tax (GST) certificate, etc.
  • Convenient winding up procedure: Winding up of proprietorship firm is easy in India. Tax registration acquired in the name of business is to be cancelled.

Ready to assist with your Queries