Sole Proprietorship

Micro or Small size Manufacturing or Trading entities that are owned and controlled by one person, with typically having just a GST number, are commonly known as sole-proprietorship firms.

Digital Filings can help you in…:

 Picking the appropriate government registration

 Connecting with verified vendors / partners to submit the application

 Supporting you at every step until your business is registered

From INR 2,899/- all inclusive fees, 12 Months* EMI@INR 259/-

Understanding Sole Proprietorship

Sole Proprietorship is the most prevalent business model in India, adopted by many micro and small businesses across the nation. This business formation is quite easy to start-off and requires minimal regulatory compliance. Sole-proprietorship mode is the first-choice for small traders and merchants, primarily operating in unorganized sector, because a proprietorship firm can set-up and start operating within 15-days of time. Also, there is no designated mechanism provided by the Government of India for registering sole-proprietorship form of business.

Business entities under the proprietorship model need to be established through certain tax registrations (including GST number, VAT) along with other compliance requirements. All the registrations for a proprietorship business are, however, to be in proprietor’s name, making the owner solely accountable for all business liabilities. Various desirable advantages, including limited liability, perpetual existence, corporate status, and others that are critical for any business, are missing in a sole-proprietorship model.

Key-Advantages of a Proprietorship Firm

Easy to Start

Quite Economical

Less Complicated

Easy to Close

Easy to Start & Close

Sole-Proprietorship is the simplest form of business to start, which requires minimal compliance and can be set-up in just 15-days. All you need is GST registration that can be done by your PAN card and address proof (AADHAAR or Voter’s card).

Similarly, a proprietorship firm can easily be wind up or closed. In most cases, only the tax registrations obtained in the proprietor’s name are to be cancelled.

Quite Economical

Sole-Proprietorship is fairly inexpensive as compared to other business modes, like One Person Company (OPC). Also, it requires minimal compliance, so it is economical even in the long-run. Moreover, there is no need to hire an auditor, as proprietorship firms are only recognized through the government and tax registrations, and the extent of their compliance is limited to the annual filing of their services and taxes.

Less Complicated

Unlike company or partnership modes, where more than one person is required to set-up any business, a sole proprietorship can be registered and operated by a single individual. Moreover, a proprietor can select any name for the venture – as long as it does not infringe on a registered trademark. Since the name is not registered, any other person can, however, use the same business name unless trademark registration is obtained.

Required Documentation Chart

Indian Resident
Identity Proof

  • Copy of PAN Card (mandatory)

 Residence Proof

  • AADHAAR Card
  • Voter’s Card
  • Bank Statement
  • Electricity / Water Bills (recent two-months)

Proof of Registered Office

  • Property Tax Receipt
  • Electricity / Water Bills (recent two-months)

Additional Documents:

  • Rent Agreement*
  • Sales Deed
    *Along with the Rent Agreement, a letter of consent by landlord containing a signed agreement to use the rented space as a registered office is also obligatory to be submitted.
Non-Resident Indian / Foreign Resident
Identity Proof

  • Notarized or Apostilled Copy of Passport (mandatory)

 Residence Proof

  • Notarized or Apostilled Copy of Passport (mandatory)

Proof of Registered Office

  • Property Tax Receipt
  • Electricity / Water Bills (recent two-months)

Additional Documents:

  • Rent Agreement*
  • Sales Deed
    *Along with the Rent Agreement, a letter of consent by landlord containing a signed agreement to use the rented space as a registered office is also obligatory to be submitted.

Documents for GST Registeration

For the GST registration, a proprietor needs to submit certain additional documents, including passport size photograph and either a cancelled cheque of personal bank account or bank statement or front page of bank passbook.

What People Frequently Ask…

How many people can start a sole proprietorship business?
As the name suggest, sole proprietorship firm can be started by only one person and can have only one promoter.
Who can start a sole proprietorship business?
Any citizen of India with a current account in the name of the business can start a sole proprietorship. Also, registration will depend on what business you are planning to form, however, banks generally require a Shops & Establishments Registration for opening a current account. Non-Resident Indians  (NRIs) and Individuals of Indian Origin can, however, only invest in a Proprietorship with prior approval from the Government of India.
What types of businesses generally operate as sole proprietorship?
Most local businesses, including grocery store, fast food vendor, and even small traders and manufacturers can operate under the sole proprietorship mode. Even large businesses, including big jewelry shops also operate as sole proprietors, but this is not recommended.
How will DigitalFilings help me start a Proprietorship?
Associates at Digital Filings will first assess and understand the requirements of the planned sole proprietorship firm and help you obtaining the relevant registrations. We will assist in opening a current account in name of the business, thereby establishing an identity for the venture.
How can the name of a sole proprietorship be registered?
Since there is no specific regulation for the registering the name for a sole proprietorship, a firm under this mode of business can adopt any name provided it does not infringe on any registered trademarks. Also, the only way to exclusively use a business name is to obtain a trademark registration for that name.
Can other individuals also invest in a sole proprietorship firm?
No, since the a business entity under sole proprietorship model is owned, managed, and controlled by one person.
Is it mandatory to audit a sole proprietorship business?
No, as sole proprietors are not bound to prepare audited financial statements every year, however, a tax audit may be required based on turnover and other conditions.
Can I later convert my Proprietorship into a Company or LLP?

Yes, a sole proprietorship firm can be transitioned to a Company or a Partnership mode at a later date, however, the procedures are complicated, expensive, and time-taking. Therefore, entrepreneurs should wisely consider starting-off either as a partnership or c company form of business.

Apart from a current account, what all other registrations required for a sole proprietorship firm?
This purely depend on the form of the sole proprietorship business. It is, however, mandatory for any business whose annual turnover exceeds INR 20 lakhs (and INR 10 lakhs in the case of North Eastern states) to get the GST registration done. For businesses, involved in selling goods or services to customers out of a commercial establishment, it is obligatory to register under Shops & Establishments Act.
How much capital is required to establish a sole proprietorship firm?

Essentially, there is no minimum limit to the capital for starting a sole proprietorship business.

What all documents are required to register as a sole proprietor?

You would need valid address and identity proofs, PAN card, all Know Your Customer (KYC) documents,  and rent agreement. In case of Shops & Establishment Act Registration, you will need a sale deed.

What documents are needed to open a current account for a sole proprietorship firm?

As per the mandates by the Reserve Bank of India (RBI), an individual needs to provide two registration forms, along with the PAN card, identity proof, and address proof to open a bank current account for a sole proprietorship firm. The additionally required two forms of registration can be any of the following: service tax registration, MSME registration, VAT/TIN/CST registration, Shop & Establishment Act registration, Professional license, Chartered Accountant certificate, or others as specified in the RBI’s KYC norms.

Does sole proprietorship firm have a separate legal identity?
No, there is no separate legal identity for a sole proprietorship business as the PAN Card of the proprietor will be the PAN Card of the sole proprietorship firm. Even the assets and liabilities of the sole proprietorship business and the proprietor will be one and the same.
Does my sole proprietorship firm have a Certificate of Registration?
No, sole proprietorship firms do not have a Certificate of Incorporation or Certificate of Registration. The identity of a sole proprietorship firm is established by registering with the relevant and applicable Government bodies.
How long does it take to establish a sole proprietorship business?
A sole proprietorship business can be registered and start operating generally within 5 days and maximum within 15 days of time, depending on the workload with relevant government authorities and clients.
Can a sole proprietorship firm be transferred to another individual?
No, a sole proprietorship firm cannot be transferred to another person, unlike a Limited Liability Partnership (LLP) or a Private Limited Company (PLC). Only the assets owned by a proprietor can be transferred to another person through sale. Intangible assets like Government approvals, registrations, and others, however, cannot be transferred to anyone.
What are the annual compliance requirements for a sole proprietorship business?
Sole Proprietorship business need to file their annual tax return with the Income Tax Department, however, other tax filings like service tax filing or VAT / CST filings may be required, based on the business activity performed.
Can the registrations relevant to a sole proprietorship firm be submitted online?
Most of the registrations (like sales tax / GST), which are controlled by the central government can be filed online, however, the registrations managed by state government depend on state to state.

Pocket-Friendly Options

How we Do It…

Partners at Digital Filings are capable of getting your sole proprietorship firm registered maximum in 3 to 5 business days. Our commitment is, however, purely rely on the time coordination from relevant authorities and clients.

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First thing First

Before kicking-off with the registration process for your sole proprietorship firm, expert business consultants at Digital Filings will first seek to well-understand your venture. We will not just help you establish an identity for your firm, but will also help you decide what registration your business actually requires. Additionally, we will guide you with the relevant registration documents for smooth processing.

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Let us Begin

To establish an identity for your sole proprietorship firm, professionals at Digital Filings will assess and obtain the appropriate tax registration (VAT / TAN / GST) based on the form your business. We will connect you to an experienced and verified vendor partner who will not just file your application but will also keep you updated with the further developments.

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Finally its Done

Once the filing work is done and application is submitted, Digital Filings will provide full support until your sole proprietorship firm is registered as you desired. This generally takes 3 to 5 days in most of the cases, however, can stretch to a maximum of 10 to 15 days in certain cases, primarily due to the workload of authorities and other uncertainties.

Our Patrons’ Speak

team-3“Heartfelt thank you for proficiently taking care of all the registration related tasks and letting me focus on my business operation without any stress.”

Srinivasan

team-3“Highly impressed by the personal attention of the professional staff in getting the GST registration done and arranging the MSME certification for my business.”

Hari

team-3“Thank you Digital Filings for all your professional and timely support in getting my company registered.”

Sachin Gupta

team-3“I never thought it would be so easy to get my proprietorship firm registered. Thank you team Digital Filings. I will refer your proficient services to my friends too.”

Pawan

team-3“Thank you for simplifying the so complicated filing and documentation and getting my business smoothly registered.”

Amit

team-3“Heartfelt thank you for proficiently taking care of all the registration related tasks and letting me focus on my business operation without any stress.”

Srinivasan

team-3“Highly impressed by the personal attention of the professional staff in getting the GST registration done and arranging the MSME certification for my business.”

Hari

team-3“Thank you Digital Filings for all your professional and timely support in getting my company registered.”

Sachin Gupta

team-3“I never thought it would be so easy to get my proprietorship firm registered. Thank you team Digital Filings. I will refer your proficient services to my friends too.”

Pawan

team-3“Thank you for simplifying the so complicated filing and documentation and getting my business smoothly registered.”

Amit

Mission Statement

Every Partner at Digital Filings is Focused...
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Digital Filings is a leading business and legal services provider in India, assisting entrepreneurs in effectively and economically setting-up and managing their venture. Digital Filings consistently ensures that your venture is always compliant, so you can efficiently focus on making your business ascend.

Our strong network of proficient partners thoroughly understands the business specific regulatory/legal requirements and is focused to assist business owners at every stage of their venture.

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Easy Registration

Experts at Digital Filings can proficiently help in registering your sole proprietorship firm, either by getting you a GST / VAT Number, Service / Professional Tax Registration, a Shops & Establishments Act Registration, a Micro, Small & Medium Enterprises (MSME) Registration, or an Import-Export Code.

Supportive Team

The team of well-informed professionals at Digital Filings is just a phone call away to address every concern / query about the registration of your sole proprietorship venture. We will, however, put our best to make sure that all your questions are well-answered even before they strike in your mind.

Expert Support

Experts at Digital Filings precisely understand all of your requirements and strive to ensure that all the desired documents are in place so that you can effectively align yourself with every legal / administrative interaction. We will also provide you complete clarity on the process to set genuine expectations.