Registering and starting a sole proprietorship is one of the most common structures of business in India.
According to the Government of India, a sole proprietorship is a single-person establishment where the individual manages and controls their business on their own. It is cost-effective as there are no fees to pay during the initiation of the process and thus a great option for an individual entrepreneur. As well, the primary establishment is easy as there is no need for registration. By bypassing registration we are spared of government amenability and supervisory paperwork.
Mandatory Requirements to Start a Sole Proprietorship
The five necessities to start the business are —
Open a current account that ensures safe payments in the proprietorship's name. This is the groundwork for starting a sole proprietorship.
An Aadhar card. Here is where you can get one.
A PAN card. Here is where you can apply online for one.
A bank account.
Registered office proof (Rent Agreement or Property Documents).
Starting the Sole Proprietorship
The registration process is meant to mark the existence of the sole proprietorship.
In India, a sole proprietorship can be established with only two things:
Selecting a unique name for the business
Selecting the location of the business
The Registration Process
There is no strict protocol to register a sole proprietorship. Its existence can be established by either
A. generating a bank account in the name of the proprietorship or
B. through attaining the licenses necessary to conduct business.
Opening an Account
Submitting correct documentation is the most important step in the opening of an account. Any two documents from the list below can be used for this purpose.
License or certificate from Municipal Officials under Shop and Establishment act
Property registration document
Rent agreement along with utility bill
License from registering authority
License for the concerned individual from central or state government
IEC code. Here is where you can apply for one.
Complete income tax return of the proprietor
Depending on the type of business, the license issued for registration varies. Here is a life of a few of them —
PAN Card. Acquiring a PAN card is a necessity in the business sector. It helps in attaining licenses and certificates, company registrations, and filing the tax return for a sole proprietorship.
GST Registration. All the businesses related to goods and services must possess a GST registration. Thereby, attaining GST is a good license while trying to start a sole proprietorship. Here is where you can apply.
Shop and Establishment Act license- this acts as proof of existence.
MSME registration. Easily attainable in most states if the firm is acceptable under the MSME sector. Here is where you can apply for a Udyog Adhaar certificate.