A sole proprietorship is one of the most common and oldest forms of business in India. It is a single-person establishment wherein an individual owns, manages, controls, implements, and executes his/her business on their own.
A sole proprietorship does not require any registration but to gain tax benefits people do register their firm. In proprietorship firm registration, there is a minimum requirement of regulatory compliance for starting and operating. A proprietorship firm is advised to get some essential registrations for better operational functioning of the firm.
Proprietorship Firm Registrations Process:
The registrations required for a proprietorship firm are:
i) Registration of MSME
It is not compulsory to get an MSME (Small and Medium Enterprise) registration, but it increases a company’s prospects of obtaining financing and provides assistance in other legal concerns.
The MSME registration can be done through an online registration process on MSME official website.
ii) Shop and Establishment Act License
Shop and Establishment Act License is not mandatory for all sole proprietorship firms but most firms have to obtain this license, as per the local laws of the region of the business.
A sole proprietor can register his business under the Shop and Establishment Act, if he has a shop as a place of business.
Here, shop means any premises:
- a place where goods are sold, either by retail, wholesale, or
- a place from where services are provided to customers.
- It includes an office, a store-room, godown, warehouse or work place, whether in the same premises or otherwise, which is used in connection with such trade/ business.
It does not include a factory, a commercial establishment, residential hotel, restaurant, eating house, theater or other place of public amusement or entertainment;
The registration process depends state-wise and business owners need to check the specific state-wise website for the registration.
iii) Goods and Services Tax (GST) Registration
GST registration is another way of getting your sole proprietorship registered. Goods and Services Tax registration is necessary only if annual turnover is more than Rs 40 lakh and Rs. 20 lakh for businesses operating in North-eastern states.
GST registration is a great method of getting an identity for your sole proprietorship concern.
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Note: This Post was last updated on February 3, 2023
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