register sole proprietorship

register sole proprietorship

In India, register sole proprietorship is a commonly adopted business structure. In a sole proprietorship, a single individual takes full ownership, management, and control of the business.

Benefits to register sole proprietorship

  1. Sole Beneficiary of Profits: register Sole proprietorship and one-person companies allow the sole owner to be the exclusive beneficiary of profits.

  2. Minimal Compliance: Sole proprietorship firms have minimal compliance requirements, and income tax filing is only required for taxable income above specific thresholds.

  3. Tax Deductions: register sole proprietors can avail of tax deductions available to individuals, reducing their income tax liability.

  4. Privacy: Proprietorship firms offer more privacy compared to registered entities like companies or LLPs.

  5. Quick Registration: The process of registering a Sole Proprietorship Firm is quick and straightforward.

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Procedure for register sole proprietorship

  • Choose a Business Name

  • Obtain Required Licenses and Permits: Ensure you have the necessary licenses and permits to operate your business in your state or city.

  • Apply for Shop and Establishment Act License: This license is required in your city.

  • Open a Current Bank Account: Open a bank account in your business’s name.

  • Register for Taxes: Register for taxes like GST and obtain any necessary tax identification numbers.

Documents Required for register sole proprietorship

  • ID Proof:

    • Aadhaar Card
    • PAN Card
  • Office Address Proof:

    • Rental agreement for the registered office
    • Sale deed or utility bill for self-owned property
  • Passport Size Photo

Taxation on register sole proprietorship

If you operate a sole proprietorship business in India, you don’t need to file a separate income tax return for business profits. Instead, you declare business profits in your personal income and pay taxes based on individual tax slabs.

Income Tax:

  1. Use ITR-3 Form if you belong to the category of Hindu Undivided Families (HUFs) or resident individuals and earn income through a profession or proprietorship business.

  2. Use ITR-4 or SUGAM form if your total income is up to ₹50 lakh, and your Income from Business and Profession is computed on a presumptive basis.

GST:

GST registration is mandatory for sole proprietorship firms in the following scenarios:

  1. When annual turnover exceeds ₹40 lakhs (₹20 lakhs in Special Category States).

  2. When selling products or services across state borders, either directly or through an e-commerce portal.

  3. When seeking to claim input tax credit for inputs on a purchase voluntarily.

Current Bank Account for register sole proprietorship

To open a current bank account after obtaining sole proprietorship registration, provide the following documents:

  • PAN Card
  • GST Registration Certificate
  • Acceptable identity proofs: Passport, Voter Identity Card, Driving License, or Aadhaar Card.
  • Acceptable address proofs.
  • Passport-size color photograph.
  • Account Opening cheque from your existing Savings/Individual Current Account.

Annual Compliance for register sole proprietorship Firm

Proprietorship firms, while simple, have specific compliance requirements:

  1. ITR Filing
  2. GST Return Filing
  3. TDS Return Filing
  4. EPF Return Filing (if registered)
  5. Accounting and Bookkeeping
  6. Tax Audit (if applicable)
  7. FSSAI Registration and FSSAI Return Filing (for food businesses)
  8. MSME Registration (for government benefits)

Note: Sole proprietorship is a straightforward business structure in India, with its own set of benefits and responsibilities. Understanding these aspects can help individuals make informed decisions when setting up and running sole proprietorship businesses.

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