What are the Processes of Sole Proprietorship Registration in India?

Sole Proprietorship registration is a completely online process. Sole-Proprietorship can be started easily with minimal registration and compliance with almost no fees or costs involved. A sole proprietorship is started by those entrepreneurs willing to start their commercial enterprise that is less complex as compared to other business structures in India. 

Sole-Proprietorship Registration Process

It is the most common and favored business entity as it requires minimal compliance, easy registration and needs only one person to start up the business. Such an owner is personally liable for all the debts and losses incurred in the business as well he is the sole responsible for the entire profit earned by the firm. Following are the three ways to do Sole Proprietorship Registration:

• Shop & establishment registration
• GST registration
• Udyog Aadhar registration under MSME 

Shop & Establishment Act: In case the proprietor has shopped for the place of his business as defined under this act, it is one of the methods to get sole-proprietorship registered in India by registering the business under this act. As per the act, the shop includes the following:

1.      A place for the sale of goods, either retail or wholesale.

2.      A place for Providing the Services to Consumers

The shop includes office, warehouse, go down, store-room, etc. that can be used as a commercial place in connection with trade and business:

• Definition of the shop as per the Shop & Establishment Act doesn't include the following:
• Factory
• Hotel
• Restaurant
• Theater 
• Public Amusement

Here are the Steps to Follow for Registration

• Apply to the Inspector within 30 days of commencing the business having jurisdiction where the shop of the proprietor is situated. The application shall contain the following information:
• Name & Contact details of the owner
• Address of the owner
• Address of the premise
• Name of the establishment
• Inspector will verify the application for its correctness and accuracy
• If the application is completed in all aspects, InspectorInspector shall allot the registration certificate that remains valid for 5 Years that can be renewed once expired.

GST Registration: This is the second method for sole-proprietorship registration. GST can be applied online through https://www.gst.gov.in/ if the applicant is dealing in exchange and trade of goods and services. GST registration is one of the best methods to give the sole-proprietorship a legal entity. The only drawback of GST Registration is that once registered; there shall be regular compliance under GST to be followed by the registered entity. GST registration on sole proprietor is mandatory in case his turnover exceeds INR 40 Lakhs, so there will be an unnecessary addition to compliance in case he opts for volunteer registration. 

Registration through Udyog Aadhar under MSME: Ministry of MSME allots Udyog Aadhar number to business which is the unique identification number. Udyog Aadhar can be applied by every entity such as company, partnership, sole-proprietor, etc. This registration provides the benefits offered by the Ministry of MSME along with added advantages of getting legal registration to its business which can be considered as sole-proprietorship registration. Udyog Aadhar Registration has replaced the old registration under EM-I and EM-II. 

Documents required for Sole-Proprietorship Registration

Following are the documents compulsory for registration:

·         Aadhar Card: Aadhar card is mandatory for every registration now a day's taking place in India. Income tax website has made mandatory for the entities to link PAN with Aadhar of the individual for filing of the income tax return.

·         PAN Card: PAN card is applied online through NSDL and is one of the mandatory requirements for every income earning person.

·         Bank details: Bank details such as name, branch, IFSC code, etc., is compulsory for registration

·         Registered Address proof: Copy of rent agreement and NOC from the landlord is required in case the registered office is rented, and in case it is owned premise, the self-attested copy electricity bill is needed.

Expert's Advice

As per our opinion, after evaluating the different Methods of Sole Proprietorship Registration, we will advise you to take GST registration in case your turnover exceeds the prescribed limit because it is the most common legal recognition. But in case the turnover doesn't exceed it is advisable to opt amongst the other two registrations.

We have expertise in all the business-related registration; for further guidance, you can contact us.