There is no government registration needed in order to start a sole proprietorship business in India. You don’t have to go to an online registration portal and fill up a form or submit any documents. However, you do need to open a current account with a bank in the name of the business.
A current account in turn requires that you have a specified location from which you are doing business. The bank will ask you to submit at least two documents as proof of business location in the form of government registrations such as shop act license, service tax, CST/VAT, etc.
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I will explain in detail how to start and register sole proprietorship business in India, and all the documents required. But first, let’s take a minute to understand the legal definition of a sole proprietor, and what are the benefits as compared to registering a Partnership, LLP, or pvt ltd company.
Sole proprietorship, as defined by the Govt. Of India, is a “one-man organisation where a single individual owns, manages and controls the business.”
One of the primary benefits is ease of formation, since a government registration is not required. There are no fees to be paid for starting a one-man business on your own, and there is no government regulatory paperwork and compliance to be fulfilled. There are no minimum capital investment requirements, and the proprietor has full control and ownership stake.
You get to keep whatever profit or income you generate. Furthermore, the tax benefits of sole proprietorship prevent double taxation of the firm. You will file returns and pay taxes only in your personal name. There are no separate income tax returns to be filed and no tax to be paid by the firm.
There are only two things you need to do for starting a sole proprietorship business in India.
1. Choose a business name.
2. Select a location as the place of doing business.
Now you can legally start doing business.
You don’t need to register your sole proprietorship in India. But in order to receive payments in the name of the business, you need to open a current account in a bank. For this, you will need proof of existence of the firm, and the address proof. Documents needed include:
1. Pan card and ID for address proof of proprietor.
2. Business address proof (eg: electricity bill in your name, or electricity bill + registered rental agreement, etc.)
3. Two government registration documents confirming name and address of business (shop establishment license, service tax registration, VAT/CST, etc.)
4. CA Certificate – You can get this from any CA. They might charge you a nominal fee for giving you a certificate.
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