"Starting up a business as an
Individual - A Sole Proprietorship"
proprietorships are a single person run and owned businesses. Sole
Proprietorships are one of the easiest & simplest form of
business. There is no formal procedure for registeration of sole
proprietorship. The business is run under the PAN of the proprietor.
Proprietor and the proprietorship are a single entity under Income Tax.
to open a current account with a bank in the name of sole
proprietorship KYC norms
require, a registeration certificate of the sole proprietorship as a
proof of name, address & activity of the sole proprietorship
concern. Following are the possible
options of registrations for a sole proprietorship depending on the
nature of business:
- Service Tax Registeration
: If you have a business of providing services, you should get a
service tax registration. Service tax registration is mandatory if the
value of services in an year are more than 9 lacs.
registration of service tax taken, it is mandatory to file service tax
return on a half yearly basis even if value of services is not in
taxable range(ie. Rs. 10 lacs)
/ TIN /Sales Tax Registration:
If you are in trading or manufacturing business you need to get a VAT
registration. VAT is state government tax so each state Government has
distinct rules depending on the type of goods manufactured or sold.
getting registered for VAT, a unique 11 digit registration number is
allotted which serves as a VAT/ CST/ TIN(Tax Identification number)
number for the business. Thus now VAT registration is also
used as CST registration or TIN registration.
& Establishment Act: If you plan to set a shop or
a commercial establishment & employ people
you should get a Shops & Establishment registration. Every
State has its own rules & procedures regarding it.
If you are in a practising profession like chartered accountant,
lawyer, doctor etc. you need to get a professional tax registration
& pay professional tax. Professional tax is by state
governments and not all the states impose professional tax.
If you are having more than 20 employees you need to get registered
with EPFO. Contribution to EPF is mandatory for the people having
salary upto Rs. 6500 & its the duty of employer to deduct
deposit the EPF contribution of employee.
State Insurance (ESI):
If your establishment employs 10 or more person then you are covered
under ESI Act & need to get the ESI registration. The minimum
number of employees is 20 in case of hotels, restaurents, hospital,
newspaper establishments, cinemas, road motor transport
14 states have already reduced the above coverage limit of employees
from 20 to 10 employees and remaining states are also expected to
reduce this limit to 10 employees.
Excise: Excise is a tax levied on manufacture of goods. If
you are into the manufacture of excisable goods you may need to go for
of Sole Proprietorship:
Exporter Code (IEC):
If you are planning to go international with your business you will
need Importer Exporter Code (IEC). IEC is required if your are planning
to import/export goods or services.
- All Deductions of chapter VI (Section 80C, 80D
& so on) for tax savings are applicable.
- Proprietor & proprietorship being
treated as a single entity so no seperate returns needed.
- Easy to start & easy to close.
Still have doubts, don't let them bother you, just write to us at email@example.com
or through Contact
- NRIs & PIOs can also start a sole
proprietorship with the approval of RBI. However profits can not be