Steps to Register a Sole Proprietorship in India

There are four steps to register your sole proprietorship in India:

Step 1: Register your Business Name - Consult our legal experts and choose a proper name for your sole proprietorship. Our team will assist you in registering your business name.
Step 2: Get your PAN, GST, and MSME Registration Done - Our team will help you get your Udyam registration certificate and GST registration done in one go!
Step 3: Obtain Shop and Establishment Act License - Submit all the required documentation, and we will file the registration form for your sole proprietorship.
Step 4: Open a Current Account - After business registration we will assist you in opening an instant zero-balance current account. Our team also provides GST, ITR annual filing, and trademark registration support.

Legal Status of Sole Proprietorship

It Is Not a Separate Legal Entity From the Business Owner - Unlike other business structures, a sole proprietorship doesn't have the power to function as a separate legal entity. As a result, you cannot register any assets under the name of the sole proprietorship.

It Can Sue, or Get Sued Only by the Owner's Name - The owner or sole proprietor has the power to run a sole proprietorship. The company cannot be sued; only the owner can be sued in case of any litigation.

No Legal Formalities to Create Sole Proprietorship - Apart from the required licensing to conduct the business, there are no complex legal formalities to register a sole proprietorship.

It Is Not a Taxable Entity - Since a sole proprietorship doesn't have any legal identity, it cannot be treated as a taxable entity. The funds generated by the sole proprietorship will be taxed under the proprietor's name.

Compliance and Tax Requirements for Sole Proprietorships

Income Tax Filing - The business owner must file a personal income tax return using the form ITR-3 or ITR-4 for income tax compliance.

PAN Registration - It is mandatory for the sole proprietor to have a Permanent Account Number (PAN). The same PAN is used for all tax filings, including income tax and TDS, as the business is not a separate legal entity.

TDS and Quarterly Returns (If Applicable) - If a proprietorship has employees or transactions beyond a certain threshold, TDS returns must be filed quarterly.

GST Registration and Returns - If the annual turnover of the proprietorship exceeds ₹20 lakh (₹10 lakh in special category states) for service providers or ₹40 lakh for goods suppliers, GST registration becomes mandatory. The business must file monthly or quarterly GST returns, based on the scheme opted.

Sole Proprietorship vs. Other Business Structures

Here is a detailed comparison between sole proprietorship and other business structures. Before registering your entity, it is crucial to consider the various business structures, their advantages, and how they suit your business activities in detail:

Particulars	Sole Proprietorship	LLP	Partnership
Establishment	It is easy to register doesn't require any complex paper works	A bit complicated process and requires the applicant to file articles of incorporation with the state government	The applicant should file all the details regarding the partnership partners and the business directly to the MCA
Name of the business	The business can function under the owner's name or formally registered business name	It requires an established and secured name ending with the word LLP	It requires filing directly for name registration.
Liability	There is no legal protection for the firm. The owner has 100% liability for debt.	Legal protection is provided for the owners.	The owners are liable
Taxation	The income generated is filed under the owner's personal taxes.	In case of two or more owners the taxation is filed appropriately as partnerships.	Filed under partnership both the income or the losses are declared on personal returns