Step by step
- PAN card - your personal PAN is the business PAN. No PAN? Get an instant e-PAN on incometax.gov.in.
- Choose a business name - check it is not someone's trademark on ipindia.gov.in (trademarks).
- Udyam (MSME) registration - free, online, with your Aadhaar and PAN on udyamregistration.gov.in. You get an Udyam certificate.
- GST registration - on gst.gov.in, if you cross the turnover limit, sell to other states, or sell through most online marketplaces. Free.
- Shop and Establishment licence - from your state labour department (or municipal body) if you have a shop or office. Find your state's service on nsws.gov.in (National Single Window) or shramsuvidha.gov.in.
- Current bank account in the business name - banks usually ask for two proofs such as Udyam, GST or the Shop licence.
- Other licences if your work needs them - food (foscos.fssai.gov.in (food licence)), import/export (dgft.gov.in (IEC for import/export)), trade licence from your municipality.
Taxes
- Business profit is added to your personal income and taxed at your slab rates. File your return on incometax.gov.in.
- Small businesses and professionals can use the presumptive tax scheme (simpler books, tax on a fixed percentage of turnover). The new Income-tax Act, 2025 applies from April 2026, so ask your CA for the current section and limits.
- Pay advance tax in instalments if your tax for the year is more than Rs 10,000.
- GST: mandatory above Rs 40 lakh turnover for goods and Rs 20 lakh for services in most states (lower limits in some special-category states). Check the current limit on gst.gov.in.
Problems you may face, and the fix
| Problem | Fix |
|---|---|
| Bank refuses a current account | Get two documents in the business name: Udyam + GST, or Udyam + Shop licence. |
| Name on PAN and Aadhaar do not match | Correct it first (PAN on incometax.gov.in, Aadhaar at UIDAI) - registrations are rejected on mismatch. |
| GST application sent back for "clarification" | Upload a clear address proof (electricity bill + rent agreement / NOC from owner) and reply within 7 days. |
| A website asks money for "Udyam registration" | Do not pay. Udyam is free on udyamregistration.gov.in only. |
| Business debt is risky | Your personal assets are not protected; move to an LLP or Pvt Ltd as risk grows. |
Lesson learned
A proprietorship is official once you have PAN, Udyam, a bank account and the licences your work needs - all from official portals.
Frequently asked questions
Is registration mandatory for a sole proprietorship?
There is no single mandatory registration, but you need the ones your work requires, such as GST above the limit and a Shop licence for premises.
Is Udyam registration free?
Yes. It is free on udyamregistration.gov.in. Do not pay agents or look-alike websites.
Last checked: November 2026. General information only, not legal or tax advice.