Sole Proprietorship

Sole Proprietorship Registration

Sole proprietorship is a small and independent business which is owned and have the management by the single owner. This type of business is very popular across the unorganized business sector. Also it is very popular among small merchants and the traders. In India, it is not taxed as separate legal entity. The business people file their business taxes as part of the tax returns. The sole proprietorship does not require any registration as such but few registration can make it to function. They are mentioned below. The sole proprietorship can be registered as SME registration, Shops and establishment registration, GST registration. The sole proprietorship is the simplest and easiest form of the business. No legal recognition and attendant formalities are needed. It has distinct advantages. Hence it is popular in many places. The proprietor should bear all the losses and the gains.

Tax advantages of Sole proprietorship

The tax proprietor can pay the personal and entity income tax at the end of the financial year. There is no income tax separately. This can be considered as hidden tax benefits of the proprietorship company.

Proprietor income tax slab

Income tax slabs Tax rate
Rs. 2, 50, 001 to Rs. 5 lakh 5%
Up to Rs.2.5 lakh Nil
Rs. 5, 00,001 to Rs. 10 lakh 20%
Above Rs. 10 lakh 30%


  • Single ownership
  • No minimum capital required
  • Office address proofs
  • Copy of PAN card
  • Rental agreement copy
  • The shares cannot be transferred to others without the consent of the others.
  • The deed of the partnership should be on the stamp paper.


  • It is not a separate legal entity.
  • The proprietor should handle both profit and loss
  • There is no interference in the business activities.
  • This is not long term business.
  • This business has stability.
  • This is a simple form of the organization.


The sole proprietorship is not treated separately by the IRS. Any profit that is obtained from the business can be treated as personal income and accounted on your individual tax return.

Not necessary. There is no need of any attorney to assist in the sole proprietorship.

Yes, one is personally liable for the sole proprietorship. The proprietor will be held personally accountable. When the payment of the debts is not done, the personal assets come into play.

  • It has less compliance
  • There is control on the business
  • Quick in the decision making