Sole Proprietorship
Simplifying the process of company incorporation for your business.
What is a Sole Poroprietorship?
A Sole Proprietorship is the simplest and most common form of business in which a single individual owns, manages, and controls the business. It is not a separate legal entity from the owner, meaning the proprietor is personally liable for all debts and obligations.
- Single Owner – One person has full control and decision-making power.
- Unlimited Liability – The owner’s personal assets are at risk for business liabilities.
- Minimal Compliance – No complex regulations or mandatory audits.
- Easy Setup & Low Cost – Quick registration with fewer legal formalities.
- Direct Taxation – Business income is taxed as the owner’s personal income.
- No Separate Legal Identity – The business and the owner are considered the same entity.
Why Choose Sole proprietorship?
- Easy to Start & Low Cost – Minimal paperwork and registration requirements make it the simplest business structure.
- Full Control – The owner has complete authority over business decisions without interference.
- Less Compliance – No mandatory audits, board meetings, or complex legal filings.
- Direct Tax Benefits – Income is taxed as personal income, avoiding corporate taxes.
- Flexibility in Operations – The owner can easily modify or dissolve the business without legal complications.
- Suitable for Small Businesses & Freelancers – Ideal for individuals starting small ventures with limited capital and risk.
Documents Required
- For the Proprietor (Owner):
- PAN Card (Mandatory for tax purposes)
- Aadhaar Card, Voter ID, or Driver’s License (As identity proof)
- Passport-size Photograph
- For Business Address Proof:
- Electricity Bill, Water Bill, or Telephone Bill (For registered office address)
- Rental Agreement & NOC from Property Owner (If rented)
- Property Documents or Sale Deed (If owned)
- Business Registrations (If Required):
- GST Registration (If turnover exceeds ₹20 lakh, or ₹10 lakh for special states)
- Shop and Establishment Act License (For businesses operating in a commercial space)
- MSME (Udyam) Registration (For small business benefits)
- FSSAI License (For food-related businesses)
- Import Export Code (IEC) (For businesses dealing in international trade)
Mandatory Criteria for Sole Proprietorship
- Single Ownership – Only one person owns, manages, and controls the business.
- Indian Citizenship – The proprietor must be an Indian citizen and resident.
- Business Name Selection – The business name should be unique and not infringe on trademarks.
- PAN Card – The proprietor must have a valid PAN card for tax purposes.
- Registered Business Address – A valid office address with utility bills, rent agreement, or property documents as proof.
Steps to Register
Obtain Digital Signature Certificate (DSC)
All designated partners must obtain a DSC to sign documents electronically.
Apply for Designated Partner Identification Number (DPIN/DIN)
Each designated partner must apply for a DPIN/DIN through the Ministry of Corporate Affairs (MCA) portal.
Name Reservation with MCA
Choose a unique name and apply for approval through the RUN-LLP (Reserve Unique Name) service on the MCA portal.
File Incorporation Documents
Submit the FiLLiP (Form for Incorporation of LLP) along with the required documents, including partner details and registered office proof.
Obtain Certificate of Incorporation
Once approved, the Registrar of Companies (ROC) issues a Certificate of Incorporation, confirming LLP registration.
Draft & File LLP Agreement
Prepare an LLP Agreement outlining roles, profit-sharing, and operational terms. This must be filed with the ROC within 30 days of incorporation.
Apply for PAN & TAN
Obtain Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
Open a Bank Account
Use the LLP’s PAN, incorporation certificate, and LLP agreement to open a corporate bank account.
Register for GST & Other Licenses (If Applicable)
Depending on business activities, register for GST, MSME, Import Export Code (IEC), or other applicable licenses.