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Plan Basic

Basic

₹699 + 18% GST

GST Registration

GST Return for 1Year (upto 100 invoices)

Income Tax Returns (Turnover upto 20lakhs)

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Standard

₹8999 + 18% GST

GST Registration

GST Return for 1Year (upto 100 invoices)

Income Tax Returns (Turnover upto 20lakhs)

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₹10499 + 18% GST

GST Registration

GST Return for 1Year (upto 100 invoices)

Income Tax Returns (Turnover upto 20lakhs)

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All you need to know about Sole Proprietorship

A Sole Proprietorship is one of the simplest and most common forms of business structures in India. As the name suggests, it is owned, managed, and controlled by a single individual. It is not a separate legal entity like a private limited company or LLP but a business run by an individual. The owner has complete control over the business, makes all decisions, and retains all profits. This structure is best suited for small-scale businesses, freelancers, and individual entrepreneurs. It is easy to set up and offers flexibility in terms of operations but comes with the drawback of unlimited liability for the owner.

Taxbizlegal.com is a trusted platform that provides end-to-end services for Sole Proprietorship Company registration, including incorporation, compliance, advisory, and consultancy. The process is quick, affordable, and simple. Additionally, we offer services for Partnership Registration, LLP Incorporation, One Person Company registration, and more. Contact us for a free consultation at info@taxbizlegal.com or call our compliance manager at 9403892279.

Advantages of Sole Proprietorship Company

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Simple to Establish

Minimal paperwork and formalities are required for registration, making it an easy choice for entrepreneurs.

Complete Control

The owner has full control over business decisions and operations.

Flexibility

The proprietor has the freedom to make quick decisions and changes without the need for approvals.

Low Compliance Costs

There are fewer legal obligations, such as mandatory audits or annual meetings, making it a cost-effective choice for small businesses.

Taxation

The income generated by the business is taxed as personal income, avoiding double taxation (common in corporations).

Direct Profits

The owner retains all profits generated by the business.

Key Features of a Sole Proprietorship

Single Owner, Full Control

A sole proprietorship is owned and managed by a single individual who exercises full control over all business operations and decision-making.

It’s the simplest and most direct form of business ownership, making it ideal for small or low-risk ventures.

No Legal Separation & Unlimited Liability

The business and the owner are legally the same. This means the owner is personally responsible for all debts, liabilities, or legal issues arising from the business.

There is also no mandatory share capital or formal governance structure required to operate the business.

Simple Operations & Limited Scalability

Sole proprietorships are easy to start and close, involving minimal compliance and formalities, making them highly flexible.

However, growth potential is limited, and scaling may require shifting to a more structured entity like an LLP or private limited company.

Documents Required for Registering Your Sole Proprietorship

01.

Aadhar or Passport

02.

Individual PAN Card

03.

Registered Office Proof

04.

Proof of Business Activity

05.

Address Proof

06.

GST Registration / Professional Tax

Annual Compliance for Sole Proprietorship Company

Why Compliance Matters

For sole proprietors, compliance ensures smooth business operations, reduces legal risks, and builds credibility with customers, vendors, and lenders. While there’s no need for ROC filings, adhering to financial and tax obligations is crucial to avoid penalties and stay eligible for government schemes and loans.

Other Non-ROC Business Compliances

Income Tax Return Filing (ITR-3/ITR-4) GST Registration & Filing (if applicable) TDS Deduction & Payment (if liable) Quarterly TDS Return Filing Advance Tax Payment (if applicable) Professional Tax (if applicable in your state)
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Income Tax Returns

Form ITR-3 to be filed by 31st July of the assessment year.

GST Returns (if applicable)

Forms GSTR-1 and GSTR-3B must be filed monthly or quarterly based on turnover.

Professional Tax

Compliances vary by state, usually quarterly or annually.

Maintain Books of Accounts

Financial records should be updated regularly as per business activity.

Audit Requirement

Applicable only if turnover exceeds ₹1 crore (GST) or ₹50 lakh (business income).

Frequently Asked Questions

A sole proprietorship is a business owned and operated by a single individual. The owner is responsible for all decisions, liabilities, and profits. It is the simplest form of business in India.

A sole proprietorship differs from LLPs and private limited companies in that it is not a separate legal entity from the owner. The owner has unlimited liability, unlike limited liability structures where the owner’s personal assets are protected.

In a sole proprietorship, the income is taxed as personal income of the proprietor. There is no separate tax on the business. The proprietor must file personal income tax returns and report business income under the applicable tax slab.

While a sole proprietorship does not require formal registration with the government, businesses must obtain a PAN card, GST registration (if applicable), and any necessary licenses or tax registrations based on the nature of the business.

Yes, you can hire employees, but you will need to comply with labor laws, including paying employee salaries, professional tax, and statutory contributions such as Provident Fund (PF) and Employee State Insurance (ESI) if applicable.

Yes, a sole proprietorship can be converted into a private limited company. This involves transferring assets and liabilities, applying for a new PAN, and following the incorporation process as per the Companies Act, 2013.

The key disadvantages of a sole proprietorship include:

  • Unlimited Liability: The owner’s personal assets are at risk if the business incurs debts or liabilities.
  • Limited Growth Potential: Sole proprietorships may face difficulties in raising capital and scaling the business compared to limited liability structures.
  • Lack of Continuity: The business may cease to exist upon the death or incapacity of the proprietor.

Yes, a foreigner can start a sole proprietorship in India, but they need to meet the FDI (Foreign Direct Investment) regulations if applicable. Additionally, foreign nationals must apply for a PAN card, and a valid visa may be required for residency.

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