A sole proprietorship is a corporation in which one individual owns and manages the business. You can start your business with minimal resources and finances by setting up a sole proprietorship.
In addition, the sole proprietorship is the most feasible business structure if you want to comply with the least amount of legal requirements and incur the least operational expense. The registration of a sole proprietorship in India does not require legal formalities to operate, however, some registrations are required, such as the GST registration or the MSME registration.
Are you registered for GST if you have a sole proprietorship?
It is mandatory for a sole proprietorship company to register for GST under the following circumstances:
- Proprietorship firms are considered large when they generate more than 40 lakh rupees per year in sales or turnover.
- The North Eastern States are special category states and are required to get registered with GST if annual turnover exceeds ? 10,00,000/- (Ten lakh rupees).
- Sole proprietorships that carry on interstate business are required to register with GST.
Products are supplied.
- International trade occurs when products or services are provided between two countries.
- GST registration is also required by e-commerce companies such as Amazon and Flipkart.
- The company can claim the credit if the purchase was subject to input tax.
- Voluntarily Basis.
In a proprietorship firm, what documents are necessary for GST registration?
- PAN Card: In the event, the PAN application is verified by NSDL, it is allotted within 7-8 days if the information in the application is found accurate.
- Aadhaar Card: Aadhar numbers are now required for any registration in India. As well, a person can only file an income tax return if their PAN is linked to their Aadhar card.
- The sole proprietor is shown in the following photograph: The verification process requires a passport-sized photograph.
- Details of the bank account: copy of the canceled check or bank statement.
Proof of address
- Rented office: The rent agreement and the landlord’s NOC (No Objection Certificate).
- Own office: Utility bills, phone bills, water bills, municipal khata copies, property tax receipts.
GST registration information for proprietorship firms
The following information needs to be submitted before you can register with GST:
- Business Details: Identify tax jurisdiction and trade name.
- Proprietor Details: Attach the proprietor’s photo and provide the proprietor’s personal and identity information. Save the form and move on to the next tab.
- Authorized Signatory: It is a common practice for proprietorship firms to declare the proprietor an authorised signatory. The details of the second tab will be automatically copied to the third tab. Click on save and continue to the next tab.
- Principal place of Business: The address of the business, a copy of EB, and an electricity bill are needed as proof of address and ownership. Also, choose the nature of your business activity. Once done, click Save and Continue.
- Goods and Services: Identify the goods or services best suited to your business by choosing the appropriate HNS or SAC codes. Save and continue.
- Aadhar Authentication:
- This is a new tab introduced recently. Select ‘YES’ when prompted by ‘Can Aadhaar authentication be used for Promoters, Partners, Authorized Signatories?’ to get the registration approved at the earliest.
- Enter your mobile number and email address into the verification box provided there, click on submit with EVC and enter the EVC Code sent to your mobile number and email address, and finally submit the form.
You need to consult your tax advisor and complete the legal formalities, even if you are launching a small business.