Sole Proprietorship Registration

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    Online Sole Proprietorship Registration In India

    Most businesses in India start individually without other’s participation. An individual carrying out business activities is the sole proprietor and its business entity is said to be a Proprietorship Firm. The identity of an individual and the business are not different from each other. But due to the lower tax rate, flexibility and multiple advantages people prefer this structure for the early stage of business.

    With the inclusion of partners, the control over operation reduces. Hence, these proprietors choose to run the business single-handedly and land upon sole proprietorship firm registration. Although there is no specific Act to regulate this organization, there are many ways to register a Sole Proprietorship firm. Small businesses aiming to take lower risks prefer this structure.

    Compliances Required For Sole Proprietorship Firm

    Some of the compliances that apply to a sole proprietorship include the following:

    • Income Tax Return Filing: The proprietorship’s business owner must submit a personal income tax return using form ITR-3 or ITR-4
    • Business Income: Only the ITR-3 and ITR-4 income tax forms allow for the declaration of business income. As a result, in order to comply with income tax requirements, all proprietorships must submit forms ITR-3 or ITR-4
    • GST Return Filing: If a proprietorship is registered for GST, a filing GST return each month and every three months in accordance with the business’s registration plan
    • TDS Returns: Tax must be withheld at source and TDS returns must be filed quarterly if the proprietorship has employees or spends more than a specific amount on goods and services.

    In addition to the mentioned points, the proprietorship may also need to comply with additional regulations according to its industry and region.

    Documents Required for Sole Proprietorship Registration

    ID Proof

    Scanned copy of PAN Card of all directors and Aadhar card/ Voter ID/ Passport/ Driving License

    Address Proof

    Latest Bank statement/ Utility bill in the name of director should not be older than two months

    Photo

    Latest passport size photograph of all the directors

    Rent Agreement

    (NOC), Utility bill,  Rent agreement (if rented)/ Registry Proof or House Tax Receipt (if owned)

    Benefits of Sole Proprietorship Firm

    Full Control

    The owner of a sole proprietorship firm has full control over the business. They are free to make decisions without any interference from others.

    No Separate Legal Entity

    A sole proprietorship firm does not have a separate legal entity from its owner. This means that the owner is personally liable for all the debts and obligations of the business.

    Tax Benefits

    Sole proprietorship firms are taxed as individual taxpayers, which means that the owner can claim deductions for business expenses and losses on their personal income tax return.

    Minimal Compliance

    Sole proprietorship firms have minimal compliance requirements compared to other forms of businesses. They are not required to maintain any formal records or hold annual meetings.

    Flexibility

    Sole proprietorship firms offer great flexibility to the owner in terms of operations, management, and decision making.

    Low Cost

    Sole proprietorship firms are cost-effective to operate as they do not have to pay for legal fees or comply with complex regulatory requirements.