A Sole Proprietorship is a type of business entity that is owned, managed and controlled by one person. Sole Proprietorship is the most common form of business in India, used by most micro and small businesses operating in the unorganized sectors.
Sole Proprietorships or Proprietorships are very easy to start and have very minimal regulatory and compliance requirements.
However, there is no mechanism or authority provided by the Government of India for the registration of a Proprietorship. Therefore, the existence of a proprietorship can be established through registration in at least 2 acts or a registration in one act along with obtaining one license. For instance, MSME and GST Registration can be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a Sole Proprietorship.
As there is no procedure for registration of Sole Proprietorship, any other person can also use the same name for their business. However, in case a Proprietor wishes to protect the business name and the name is unique, a trademark registration can be obtained for the business name.
Hence, the identity of a Sole Proprietorship is established through various other registrations and licenses.
A sole proprietor can register in any of the following acts to register as sole proprietorship:
1. MSME REGISTRATION : MSME or Udyog Aadhaar registration can be obtained in the name of the business.
2. TAN REGISTRATION : TAN Registration must be obtained for the Proprietor from the Income Tax department if the Proprietor is making any payments wherein TDS deduction is required.
3. GST REGISTRATION : GST registration must be obtained if the Proprietor is selling goods or services that crossthe GST turnover threshold limit for registration. However, it can be obtained voluntarily as well.
4. IMPORT EXPORT CODE : A Import Export Code or IE Code can be obtained from the DGFT in the name of the business in case of a Proprietorship business undertaking export and/or import of goods into India.
5. FSSAI REGISTRATION : In case the Proprietorship is involved in the selling of food products or handling of food products, FSSAI registration must be obtained from the Food Safety and Standard Authority of India in the name of the Proprietor.