Sole proprietorship concern is the simplest form of business. It is owned, managed and controlled by one person. Sole proprietorship concerns are easy to start and have very less regulatory compliance.
A sole proprietorship concern is easy to start. Sales tax registration or Service tax registration or both are the only requirements to establish a sole proprietorship concern.
A person can start his business with any amount of capital he wishes to. There is no minimum capital amount.
Separate return filing for business is not required as Income from business will be included in his personal income.
Other requirements like holding of board meetings and AGMs do not apply to sole proprietorship concerns.
Control of the business lies in the owner’s hands.
Limited liability concept does not apply here and whole of the liability is to be borne by the owner himself.
A sole proprietorship cannot invite funds from public.
Proprietorship concern does not enjoy the status of a separate legal identity and it does not have continual existence like companies.
Procedure for establishing a Sole Proprietorship concern
Any person who is a resident of India with age above 18 years can be a proprietor.
PAN Card, Residence Proof and ID Proof are the only requirements to start a proprietorship.
Proprietorship concerns do not have a Certificate of Incorporation or Certificate of Registration. The identity is established by registering with the relevant or applicable Government authorities.
There is no authority for registering names of a proprietorship. The only way to ensure that the name of your proprietorship is correct is to see that such name does not infringe anybody’s registered trademarks.
A business operated by proprietorship firm cannot be transferred to another person, unlike other forms of businesses, but the assets of the concern can be sold to others.
Partners can be added only in partnership firms. Sole proprietorship concerns are owned, managed and controlled by a single person.
No. A sole proprietorship concern cannot invite funds from others.
Filing of Income Tax Return, Service Tax/Sales Tax returns or both as may be. Payment of the above taxes and deduction of Income Tax at source may also be required in some cases.
Tax audit under Income Tax Act is required for only few assessees.
Yes. A sole proprietorship concern can be converted into LLP or Company by following procedures laid down in respective Acts.
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