Proprietorship registration in India

What it is

A sole proprietorship is a business owned and run by one person. It is not a separate legal entity. The owner and the business are the same in law, so the owner is personally liable for the business's debts.

There is no incorporation filing

India has no single incorporation process for a proprietorship, and no statutory proprietorship certificate. What people call proprietorship registration is a set of separate registrations, chosen according to the business. Be careful with any service that sells a single "proprietorship registration" as if it were incorporation.

The registrations that usually matter

• PAN of the owner. The business income is taxed in the owner's hands.
• GST registration, if turnover or the type of supply requires it. See GST registration and returns.
• Udyam registration, a voluntary registration for micro, small and medium enterprises, done on the government's portal.
• Shops and establishment registration or a local trade licence, which depend on your state and municipality.
• Sector licences such as food safety registration, where your activity needs one.
• A current bank account in the business name, as the bank's rules allow.

Income tax

The proprietor files a personal income tax return that includes business income. Which form applies depends on how the income is computed. See income tax return filing.

When to move to a company or LLP

Consider a private limited company or an LLP when you want limited liability, a partner, equity investment, or a structure that larger customers prefer. A proprietorship cannot raise equity. Moving later means setting up a new entity and transferring the business, so think about it early.

What you pay

Costs depend on which registrations you need and where. Some government registrations are free or low cost, and professional fees are extra. We quote after we know your business and state.