Starting Sole Proprietorship Business in India
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What is a Sole Proprietorship?
When an individual makes a choice to start his own business, to be his own boss, a sole proprietorship emerges. The sole proprietor is an economic hero as he uses his own funds, applies his own creativity, and produces goods and services on his own. The business in case of a sole proprietorship is undertaken on a smaller scale initially but can expand without limits. This form of business organization is much appreciated in the entrepreneurship literature. The compliances on a sole entrepreneur are limited to GST and Income Tax. Also, he can register in MSME to obtain loans at concessional rates in India.
“Gstmentor – Your Business Partner” has helped a lot of proprietors to start their entrepreneurship journey online. The complete procedure can be performed and all the tasks in these processes can be performed online like Obtaining GST Registration, filing GST Returns, Filing Income Tax Returns, Accounting & Book Keeping and MSME Certificate.
Step 1: Once we receive the request of incorporating a Proprietorship, our team contacts the entrepreneur, discusses with him the compliance and documents required. Briefs him about the nature of business and compliances involved.
Step 2: The second step is obtaining documents from the entrepreneur and drafting the required ones.
Step 3: The third step is filing all the applications forms like GST Registration Application, MSME Application, and an Income tax return which is filed annually.
All these processes are completed within 5 to 7 days and the Proprietorship business is ready to go.
The benefits of starting a sole proprietorship are listed below.
Be your Own Boss: A sole entrepreneur enjoys autonomy as he is the only planner, controller, and supervisor of his own business. This autonomy is not prevalent in Companies where there are large stakeholders associated. The information about his business is kept private and not disclosed to the Public or any regulatory authorities. Thus, there is complete control over the business.
Easy Setup & Compliance: Proprietorship is easiest to set up as the PAN of the owner and Proprietory Firm is the same. GST Registration is obtained on the same PAN number and Income Tax returns are also filed on the same. Therefore, there is negligible compliance cost.
Minimal Investment: A sole proprietor requires minimal investment to start his own business. The only investment he would require will depend on the scale of business activities involved initially.
Easy Liquidation and Winding Up: In case a proprietor wants to cease his business due to any reason he can surrender the GST certificate obtained and nothing else is required. Unline companies, which have a long procedure of winding up.
The documents to start a sole proprietor business in India in most cases are listed below.
These are the only documents required to start a sole proprietorship business in India.
GST Registration Certificate: Most of the businesses in India require GST Registration now. GST Registration can be obtained voluntarily even if the threshold limit has not been crossed. It is due to a GSTIN, an individual is able to claim an Input Tax Credit on goods purchased and levy GST on sales. Small businesses can opt for the Composition scheme as there are low tax rates. Obtaining GST Registration is mandatory in case of threshold limit has crossed which is Rs. 40 lacs for goods.
The only compliance involved in GST is the filing of GST Returns( GSTR-1 and GSTR-3B) in most cases.
Udyog Aadhar Registration (MSME Registration)
The Government of India to support MSMEs (Micro, Small, and Medium Enterprises) in India and for ease of business granted Udyog Aadhar Registration Or Udyam Registration on the basis of turnover and investment. This registration has several benefits which are listed below.
Shops and Establishment Registration
The Shops and Establishment Act regulates shops, commercial establishments, hotels, clubs, restaurants, eating houses, and other places of public amusement or entertainment. Shops and Establishment registration is covered under the state laws of India.
Every state has its different set of laws for Shops and establishments and they are to be followed properly.
Tax Deduction and Collection Account Number better known as TAN is a 10-digit alphanumeric number.TAN is required by all individuals because without it Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns are not accepted by TIN facilitation centers.
All those who are required to deduct or collect tax at source on behalf of the Income Tax department need to apply and obtain the 10-digit alphanumeric TAN.