Proprietorship
A proprietorship is a business owned and operated by a single individual. It’s easy to set up, with full control and all profits going to the owner. However, the owner also faces unlimited personal liability for business debts and obligations. It’s common for small businesses and freelancers.
Easy My Tax Guide: Sole Proprietorship Registration & Compliance in India
What is a Sole Proprietorship?
A sole proprietorship is the simplest business structure in India, owned and managed by just one person — the proprietor. It’s easy to start with minimal paperwork and fewer compliance requirements, making it ideal for small businesses with fewer than 5 employees.
Why Register a Sole Proprietorship?
- No complex incorporation or dissolution process.
- The proprietor makes all business decisions.
- Complete control over the business and its assets.
- Lower compliance compared to companies or LLPs.
- Ideal for small-scale businesses or solo entrepreneurs.
How to Register a Sole Proprietorship?
There is no formal government registration specifically for proprietorships. Instead, you get recognition by completing tax and other registrations:
- PAN & Aadhaar: Use your personal PAN and Aadhaar for business identification.
- GST Registration: Mandatory if your turnover exceeds threshold limits.
- UDYAM Registration: Register as an MSME to avail government benefits.
- Shops & Establishment License: Required as per your state’s regulations.
- Open a Business Bank Account: Separate from your personal account.
You can easily register online via services like Easy My Tax or Easy My Tax which help you complete GST, UDYAM, and bank account registrations.
Documents Required for GST & Other Registrations
- PAN card of the proprietor
- Aadhaar card
- Proof of business address (Rent agreement, Electricity bill, etc.)
- Cancelled cheque of your business bank account
- Photograph of proprietor
- Consent letter for authorized signatory (if applicable)
Advantages of Sole Proprietorship
- Quick and easy to set up.
- Low compliance and minimal paperwork.
- Proprietor has full control and makes all decisions.
- Suitable for small businesses with limited employees.
Disadvantages to Consider
- Unlimited personal liability: Your personal assets are at risk if business debts aren’t paid.
- Difficulty in raising funds or equity.
- No business continuity after proprietor’s death or disability.
- Not ideal for large-scale or complex businesses.
Compliance You Must Follow
- Income Tax Filing: File your income tax returns using ITR-3 or ITR-4 to report business income.
- GST Filing: If registered for GST, file monthly or quarterly GST returns.
- TDS Returns: If you have employees or make certain payments, file TDS returns quarterly.
- Other Licenses: Follow any additional local/state-specific regulations applicable to your business.
Timeline & Support
- Registration and GST approval usually take less than 15 days.
- Easy My Tax provides expert help to complete your registration and compliance hassle-free.
- You get access to accounting tools for GST invoicing and filing once registered.
