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Required documents

ABOUT Proprietary Firm

Sole proprietorship is the easiest firm to start, has lower legal compliances and is fairly easy to tackle. Indian law doesn’t treat the firm and the individual differently as is the case with a company or Partnership firm. And in view of this, sole proprietorship is taxed at individual rates instead of the corporate rates. So it greatly reduces tax formalities as one have to file only one personal income tax return.

No special registration is required when one is working from home. But one needs to obtain Professional tax license and pay tax on the income earned by the individual. Also an additional license “SHOP AND ESTABLISHMENT LICENSE" will have to be obtained from the local municipal corporation whenever one intends on expanding and setting up a physical commercial store.


Any individual or sovereign entity can start business under the form of sole proprietorship.

Required Documents

  • Pan card copy of the proprietor
  • Any document  of business proof
  • Copy of the bank statement
  • First purchase bill copy
  • First sale bill copy


There are several ways in which a proprietorship differs from other start-ups:
  • Least complex and the cheapest form
  • Does not shield the proprietor from business liabilities and debts which jeopardizes the personal assets of the proprietor.
  • The proprietor and the sole proprietorship business are not taxed separately which makes the income tax return purpose quite simple.
The business and owner are inseparable due to which the owner of a sole proprietorship is personally liable for the entire amount of all the business obligations and debts. Thus the creditors have the right to come after the owner’s personal assets in case the business goes bankrupt.
Sole proprietorships are not treated separate from its owner which means that the profit earned from the business is treated as the personal income of the owner and is accounted for in his personal income and taxed in his individual tax return in the year it was earned.

Usually there is no mandatory license to be taken for a sole proprietorship except for

Professional tax: A tax levied by State Government (mostly governed by Municipal council of the State Government) for professional or employment is Professional Tax.

Shop Establishment License is required in case of physical establishment of the business.

CST/VAT registration: If you are going to sell goods, then VAT or CST (between two states) may be needed once annual turnover crosses the threshold limit which differs from state to state.

Service Tax: Registration for Service Tax is mandatory and may be required once the value of taxable services provided exceeds 9 lacs.

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