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Proximity sequencing (Prox-seq) measures gene expression, protein expression, and protein complexes at the single cell level, using information from dual-antibody binding events and a single cell sequencing readout. Prox-seq provides multi-dimensional phenotyping of single cells and was recently used to track the formation of receptor complexes during inflammatory signaling in macrophages and to discover a new interaction between CD9/CD8 proteins on naïve T cells. The distribution of protein abundance affects identification of protein complexes in a complicated manner in dual-binding assays like Prox-seq. These effects are difficult to explore with experiments, yet important for accurate quantification of protein complexes. Here, we introduce a physical model for protein dimer formation on single cells and computationally evaluate several different methods for reducing background noise when quantifying protein complexes. Furthermore, we developed an improved method for analysis of Prox-seq single-cell data, which resulted in more accurate and robust quantification of protein complexes. Finally, our model offers a simple way to investigate the behavior of Prox-seq under various biological conditions and guide users toward selecting the best analysis method for their data.