What is the Procedure to Register a Sole Proprietorship for a New Firm

A sole proprietorship is a common type of business in India where one person runs the show. This means they set up and manage the business all on their own. It’s a good option if you want to start a business without investing too much money. You usually don’t have to register it formally.You can start a sole proprietorship from your home or a small space with very little money. The person who starts it has full control over everything. They take all the risks and get all the rewards. They can hire people to help run the business, but they still own it completely.

Lots of local businesses like grocery stores, beauty salons, clothing shops, and small factories can be set up as sole proprietorships.

Who are a sole proprietors

A sole proprietor is someone who owns their own business all by themselves. They are responsible for everything related to the business, like its money and debts. It’s quick to set up, usually taking about 10-15 days. Plus, you have complete control over the business.

Advantages of Sole Proprietorship

• Less rules to follow: Starting a sole proprietorship is easy because only one person is needed, and there aren’t many rules to follow to get it started. It’s cheaper than starting a bigger business like a company.
• You’re in charge: If you’re the sole proprietor, you have full control over the business. You’re responsible for everything, which means you can keep things private if you want.
• Making decisions is fast: Since there’s only one person in charge, decisions can be made quickly. You don’t need to ask anyone else, so you can decide on things right away.

Registering a Sole Proprietorship in India 

In India, starting a sole proprietorship doesn’t require a separate government registration process. Instead, it’s recognized through tax registrations needed for the business according to the laws. One important registration is for GST (Goods and Services Tax), which must be done under the proprietor’s name. This shows that the business operates as a sole proprietorship.

Eligibility Criteria for Registering a Sole Proprietorship in India

To register a Sole Proprietorship in India, while there aren’t explicit criteria laid down by the government as for other business structures, certain steps need to be followed. Here’s a breakdown of what’s typically required:

1. You must be an Indian citizen who pays taxes regularly.
2. If your business sells goods or services above certain limits set by the Goods and Services Tax (GST) rules, you must register for GST.
3. You should open a separate bank account for your business to keep track of your finances clearly.

In India, you can register a sole proprietorship in three ways

1. Using the Shop and Establishment Act.
2. Through Udyog Aadhar under the Ministry of MSME.
3. Through GST registration.

Here’s a simplified version….

1. Sole Proprietorship registration under Shop and Establishment Act

To register a sole proprietorship under the Shop and Establishment Act, first, determine if your business falls under the definition of a shop according to the law. This typically includes places where goods are sold or services are provided to customers.

The registration process varies by state, so it’s important to check the rules in your state. Generally, you’ll need to:

1. Fill out a registration form provided by the labor department.
2. Provide details about yourself and your business, like your name, business name, address, number of employees, when your business started, and what type of business it is.
3. Submit the application and registration fees within 30 days of starting your business.
4. Wait for an inspector to verify your application, which usually takes 10-20 days.
5. you’ll receive a registration certificate if everything meets the requirements.
6. Display the certificate in your business premises and remember to renew it regularly.

2. Sole Proprietorship Registration through Udyog Aadhaar under the Ministry of MSME

The Ministry of Micro, Small & Medium Enterprises issues special ID numbers called Udyog Aadhaar to business owners. If you run a business alone, you can get a Udyog Aadhaar from the ministry.

Before, people used EM-I and EM-II forms to register businesses. But now, the Ministry of MSME replaced those with Udyog Aadhaar.

When you register with the Ministry of MSME as a sole proprietor, you can get benefits like bank loans, subsidies, and reimbursements. You also get a unique identity for your company, known as Sole Proprietorship Registration.

Registering for Udyog Aadhaar is easy. Here’s how

1. Go to the website https://udyamregistration.gov.in/UdyamRegistration.aspx
2. Enter your Aadhaar number (the owner’s Aadhaar number).
3. Enter your name as it appears on your Aadhaar card (owner’s name).
4. Click ‘Validate & Generate OTP’. You’ll get a code on your phone linked to your Aadhaar card.
5. Enter the code you received.
6. Choose the type of organization you have.
7. Enter the owner’s PAN number.
8. Validate your PAN number.
9. Fill out the form with your details. Most of it will be filled automatically using your Aadhaar and PAN details.
10. Click “Submit & Get Final OTP”.
11. Enter the OTP you received on your phone and the verification code shown on the screen.

After you submit, you’ll get a message saying you successfully submitted your form. You’ll receive your Certificate after the registration process is complete.

3. Sole Proprietorship Registration through GST Registration

If you’re starting a business and want to register as a sole proprietorship under GST, it’s now simpler than before. Previously, you had to deal with VAT and service tax registrations separately, but now it’s all done through GST registration.

Here’s how you can register for GST:

Step 1: Visit www.filingpool.in for Sole Proprietorship Company Registration service in delhi or

Step 2: Go to the GST Portal at https://www.gst.gov.in/. Then, click on Services, Registration, and choose the New Registration option.

Step 3: Fill in the form with your details.

Step 4: Proceed and verify your details with an OTP sent to your mobile and email.

Step 5: You’ll receive a Temporary Reference Number (TRN). Use this to log in to the GST portal.

Step 6: Fill in all the required information step by step.

Step 7: After completing the form and submitting the necessary documents, you can submit your application.

Step 8: Your application will be verified, and you’ll receive an Application Reference Number via phone or email. You can use this number to track your application’s status.

Documents needed for registration typically include your Aadhaar card, PAN card, bank account details, and proof of your business’s address (such as a rent agreement or utility bill).

Overall, registering for GST as a sole proprietorship can simplify the process of managing taxes, but you’ll need to comply with GST regulations and file returns regularly.

GST Registration

If you make more than Rs. 40 lakh a year or Rs. 20 lakh in some cases, you need to register for GST. If you sell things online, like on Amazon or Flipkart, you must also get a GST number. Getting registered for GST is simple. You can do it on the GST portal. Usually, you’ll get your GST number within 3-4 days after applying.

If you’re looking to register your sole proprietorship firm, Filing Pool is here to help streamline the process. As experts in Sole Proprietorship Firm Registration services in Delhi, we ensure a smooth and hassle free registration experience for your new business venture. With our guidance, you can navigate through the steps of GST registration and necessary documentation, allowing you to focus on building and growing your business. Let Filing Pool be your partner in setting up your Sole Proprietorship Registration in delhi, ensuring compliance and peace of mind every step of the way.