Get Started

   Want Help? Call us

Sole Proprietorship


Sole Proprietorship is a most basic and easiest form of doing business in India. When single Individual starts doing business activities on its own, without joining hands with any associate, it is called proprietorship business. When business is owned, managed and controlled by single person, it’s called Proprietorship form of doing business. It takes least time to start up a proprietorship firm.

In this Business Model, all income, rewards and benefits related to the business accrues directly to the proprietor. Here, ownership of assets and also risks, liabilities related to the business lies with single person i.e. Proprietor.


Advantages of a Sole Proprietorship

Minimal Time & Cost to Start

There is no mandatory registration required with any Registrar. Proprietor can choose any name for the business. There is no mandatory capital requirement to start proprietorship. Further, limited legal compliances make it least expensive to run.

Minimum Registrations

VAT or ST registration is required only if turnover exceeds limits as set in the respective Acts.

Minimum Annual Compliances

No mandatory annual return filings as required for Companies/LLP.

Tax Benefits

Small business can take benefits of basic exemption and various deductions available under Income Tax Act.

Audit not compulsory

No statutory audit is required similar to Companies. Audit is required only if turnover exceeds particular limit as per Income Tax Act.

Operational flexibility

There is no need to appoint directors and hold mandatory meetings. Proprietor is at its free will to make all its decisions for the benefit of the business.

Disadvantages of a Sole Proprietorship


Unlimited Liability

Difficult to scale up

Audit not compulsory

Operational flexibility

Steps in formation of a Sole Proprietorship

What you need to start a Sole Proprietorship is just a Current Account in Bank. Once you have Current Account, you can start doing business, raise invoices and use bank account to settle transactions.

But the problem in opening current account is that Banks need some legal registration document to prove that the Legal Entity exists. In Maharashtra, banks ask for ‘Shop Act Certificate’ as basic documents to open current account. Once the turnover of specified goods or services exceeds specified limits, one can obtain registration under local VAT Tax Act or under Service Tax Registration.

Annual Compliance for Sole Proprietorship

Mandatory Annual Returns

No mandatory annual returns are specified for Sole Proprietorships as they are required for Companies.

Income Tax Return

If the taxable income of the business activity exceeds basic exemption limit, then Income Tax Return for the business is required to be filed under the Income Tax Act, 1961. If there are carried forward losses, then it is advisable to file Income Tax Return within the due date specified in the Act.

Read More

Income Tax Audit

In case the turnover/receipts exceed the specified limit, then Audit may be required to be conducted under provisions of the Income Tax Act, 1961.

TDS Returns

If TAN is required to be taken for the business, then returns are required to be filed under provisions of the Income Tax Act, 1961.

Read More

State VAT Returns

If registration is taken under State VAT Act, then specified returns are required to be filed as per the frequency as applicable to the business. Under Maharashtra VAT Act, the frequency of filing business returns could be monthly, quarterly or Half-yearly.

Read More

Service Tax

In case the Proprietorship business is in providing service and Service tax registration is taken, then Service Tax returns are required to be filed once in six-months.

Read More

How can we help you in starting up Proprietorship?



We help you in understanding basic structure of proprietorship business. We further help you in obtaining mandatory registrations under various Acts depending on the activity of the business.


1. Sole Proprietorship can be used for undertaking Manufacturing Activity.
We help you obtain MSME Registration.   Read More


2. Sole Proprietorship can be used for undertaking Trading Activity.
We help you obtain State VAT Registration.   Read More


3. Sole Proprietorship can be used for providing Services.
We help you obtain Service Tax Registration.   Read More


4. Sole Proprietorship can secure its Brand Name or Trade name by registering the same.
We help you register Trademark®™. Read More

Comparison Chart

Comparison chart for choosing Business Organization Form

Sole Proprietorship  
  • Small trader or Manufacturer
  • Least Time
  • No
  • No
  • Minimal
  • Difficult
  Partnership Firm     
  • Family Business
  • Least Time
  • No
  • No
  • Minimal
  • Difficult
Limited Liability Partnership
  • Professional Service Providers
  • Moderate Time
  • Yes
  • Yes
  • Less
  • Difficult
Private Limited Company
  • Start up or Growing Companies
  • Moderate Time
  • Yes
  • Yes
  • High
  • Easy

Get in Touch

Your email address will not be published.