Sole Proprietorship Firm Registration - Benefits, Process, Documents required
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Sole Proprietorship Registration Online - Benefits, Process, Documents, Fees

Updated on April 15, 2021 01:36:55 PM

Sole Proprietorship firm is the simplest form of business entity in India which is owned and managed by a single person. It is the easiest way of registering and starting a business.


MSME Certificate sample
Department of Labour sample
GST certificate sample

What is a Sole Proprietorship Firm?


Sole proprietorship is a type of business entity which is owned and managed by a single person only. It is not governed by any law and hence it is the easiest form of business in India. All the decisions and management of the business is in the hands of one person.

Benefits of Proprietorship Firm Registration


Benefits of Proprietorship Firm Registration

  1. Minimal Compliances: A proprietorship firm has very minimal compliance requirements which makes it much more preferable option than One Person Company.
  2. Easy to Start: Sole Proprietorship is not governed by any law and does not require any mandatory registration. Hence, it is the easiest way of starting a business entity.
  3. Lower cost: As there are minimal compliances, there is no need to hire an auditor for meeting the legal compliance requirements.
  4. Complete control: As a proprietorship firm is owned by a single person, he has the complete control over the business decisions and there are no interventions of any kind.

Registrations required for Sole Proprietorship Firm


GST Registration

1. GST Registration

MSME Registration

2. MSME Registration

Shop and Establishment Act License

3. Shop and Establishment Act License

Procedure of Sole Proprietorship Firm Registration

Procedure of Sole Proprietorship Firm Registration

  • Step 1. Application for GST Registration
  • Depending upon the requirement of the business and GST Law, application for registration has to be made with the department. GST registration usually takes around 5-10 working days.
  • Step 2. MSME Registration
  • To establish the existence of your proprietorship firm and avail various benefits, you’ll have to file an application for registering your firm as Small and Medium Enterprise (SME) under the MSME Act. It is beneficial for the business at the time of taking out a loan. The government runs various schemes for SMEs to provide loans at low-interest rates.
  • Step 3. Application for Shop and Establishment License
  • You are required to obtain a shop and establishment license according to the local laws. It is issued by the municipal corporation on the basis of the number of employees or workers in the firm.
  • Step 4. Bank Account Opening
  • Once all the steps are completed, the current bank account should be opened by the proprietorship firm. You can contact us for assistance with your current bank account opening.

Online Proprietorship Firm registration with Professional Utilities


The process of registering your business as a sole proprietorship firm is not much complicated. Our experts at Professional Utilities can make the whole registration process hassle-free for you. Register your firm online in 3 easy steps:

Fill our simple form

Step 1: Fill our simple form and receive a callback from our team of experts.

Provide all the required documents

Step 2: Provide all the required documents for registration of the firm and make 50% payment in advance.

Your incorporation certificate

Step 3: Your documents will be delivered to you and you’ll have to make the balance payment.

Documents required for Sole Proprietorship Registration


Copy of Aadhar Card

1. Copy of Aadhar Card

Copy of PAN Card

2. Copy of PAN Card

Address proof of office

3. Address proof of office

Apply for Sole Proprietorship Registration

Documents you’ll get after proprietorship registration


Post incorporation of your sole proprietorship firm, you’ll receive the following documents:

  1. GST Registration Certificate
  2. Shop and Establishment Act License
  3. MSME Certificate

Sole Proprietorship Firm registration fees


The total fees for registration of Sole Proprietorship Firm in India is Rs. 2,999 including government and professional fees. The main cost is mandatory registrations for existence of proprietorship firm like GST registration, MSME registration, etc.

Time required for Proprietorship registration


On average, it takes around 7-10 working days for registration of sole proprietorship firm in India subject to document verification by the concerned authorities.


  • Private Limited Company
    One Person Company
    Limited Liability Partnership
    Partnership Firm
    Proprietorship Firm
  • Act
    Companies Act, 2013
    Companies Act, 2013
    Limited Liability Partnership Act, 2008
    Indian Partnership Act, 1932
    No specified Act
  • Registration Requirement
    Mandatory
    Mandatory
    Mandatory
    Optional
    No
  • Registration under Companies Act is mandatory
    Registration under Companies Act is mandatory
    Registration under LLP Act is mandatory
    Unregistered partnerships are legal, but registered entity enjoys certain advantages
    There is no registration criteria prescribed. But, registration is recommended
  • Number of members
    2 – 200
    Only 1
    2 – Unlimited
    2 – 50
    Only 1
  • Minimum 2 and not more than 200 shareholders
    Only an individual,and an Indian resident can be the shareholder
    No bar on maximum number of partners, but minimum 2 Designated Partners are required
    It is formed with minimum 2 partners, but not exceeding 50
    Proprietor is the only owner of the firm
  • Separate Legal Entity
    Yes
    Yes
    Yes
    No
    No
  • It is a separate entity and can own assets in its name
    It is a separate entity and can own assets in its name
    It is a separate entity and can own assets in its name
    It does not have any separate identity from its partners
    Proprietor and business are considered the same
  • Liability Protection
    Limited
    Limited
    Limited
    Unlimited
    Unlimited
  • Limited up to the total value of shares subscribed
    Limited up to the value of shares subscribed
    Limited up to the capital amount agreed to introduce
    Partners are jointly and severally liable to pay the debts of the Partnership Firm
    Proprietor’s liability is to pay-off all the debts and obligation of the firm
  • Statutory Audit
    Mandatory
    Mandatory
    Dependent
    Not mandatory
    Not mandatory
  • Auditor must be appointed within the 30 days of incorporation
    Auditor must be appointed within the 30 days of incorporation
    Applicable when turnover exceeds INR 40 Lakh or contribution exceeds INR 25 Lakh
    Statutory audit not applicable. Tax audit may be applicable based on turnover
    Statutory audit not applicable. Tax audit may be applicable based on turnover
  • Ownership Transferability
    Restricted
    No
    Yes
    No
    No
  • Shares can be transferred with the consent of other Shareholders
    Shares are not transferable easily
    Ownership can be changed with consent of other partners
    Ownership is not transferable easily, clause of partnership deed should be referred
    Firm is no different from proprietor and so ownership is not transferable
  • Uninterrupted Existence
    Yes
    Yes
    Yes
    No
    No
  • Perpetual existence as the management and owners are different. Ownership is easily transferable
    Perpetual existence.
    The nominee will take place of member
    Change in Partners or Designated Partners does not affect the existence of LLP
    Change in partner leads to dissolution or formation of another partnership firm
    Death or insolvency of proprietor directly affects the firm
  • Foreign Participation
    Allowed
    Not Allowed
    Allowed
    Not Allowed
    Not Allowed
  • Foreign national are allowed to invest under the Automatic Route
    Member, nominee and director must be an Indian resident
    Foreign nationals are allowed, subject to FDI Guidelines
    Foreign nationals are not allowed to be a partner
    Foreign Nationals cannot commence proprietorship business
  • Tax Rates
    Moderate
    Moderate
    High
    High
    Low
  • Tax rate applicable for small companies is reduced to 22%, dividend distribution tax applicable
    Tax rate applicable for small companies is reduced to 22%, dividend distribution tax applicable
    With tax rate of 30% on business profit, no tax on income distribution to partners
    With tax rate of 30% on business profit, no tax on income distribution to partners
    Tax rates of individual applied to Proprietorship Firm
  • Statutory Compliances
    High
    Moderate
    Moderate
    Less
    Less
  • Companies have to meet high compliance requirements
    Companies have to meet high compliance requirements
    Lesser compliance requirements compared to companies
    Separate ITR of partnership is filed, else there is no filing requirement
    No compliances and no requirement to file a separate ITR

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Frequently Asked Questions (FAQs)


 How do I register my business as a sole proprietorship?

You can register your business as a sole proprietorship by GST registration. There are additional and beneficial registrations too like MSME, Shop & License License, etc.

 What are 3 advantages of a sole proprietorship?

The three advantages of a sole proprietorship are:

  1. Minimal Compliances requirement
  2. Easy to Start
  3. Lower Cost

 Do I need a GST number as a sole proprietor?

Yes, one needs to obtain GST registration in order to establish the existence of the proprietorship firm.

 What is the cost of registering a proprietorship?

The total cost of registering a proprietorship including govt and professional fee would be Rs. 2000.