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Sole Proprietorship

Sole proprietorship concern is the simplest form of business. It is owned, managed and controlled by one person

Rs. 14,999/- No Hidden Charges

Sole Proprietorship

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.

Advantages

  1. Easy to start

    Easy to start

    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.

  2. No minimum capital

    No minimum capital

    A person can start his business with any amount of capital he wishes to. There is no minimum capital amount.

  3. Less Tax Compliances

    Less Tax Compliances

    Separate return filing for business is not required as Income from business will be included in his personal income.

  4. Board Meeting

    Board Meeting

    Other requirements like holding of board meetings and AGMs do not apply to sole proprietorship concerns.

  5. Control the business

    Control the business

    Control of the business lies in the owner’s hands.

Disadvantages

  1. Owner's liability

    Owner’s liability

    Limited liability concept does not apply here and whole of the liability is to be borne by the owner himself.

  2. Nil access to public funds

    Nil access to public funds

    A sole proprietorship cannot invite funds from public.

  3. Separate legal identity

    Separate legal identity

    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

  • Get all your documents ready
  • Obtain Service Tax/ Sales Tax registration or both as required.
  • Register under respective Shops&Establishments Act
  • Commence your business

FAQs

What are the requirements to be a proprietor?

Any person who is a resident of India with age above 18 years can be a proprietor.

What are the documents required to start a proprietorship?

PAN Card, Residence Proof and ID Proof are the only requirements to start a proprietorship.

Will my proprietorship have a certificate of incorporation or registration?

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.

How to register the name of my Proprietorship?

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.

How can I transfer my proprietorship?

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.

Can a partner be added in a proprietorship concern?

Partners can be added only in partnership firms. Sole proprietorship concerns are owned, managed and controlled by a single person.

Can other people invest in a sole proprietorship concern?

No. A sole proprietorship concern cannot invite funds from others.

What are the compliance requirements for sole proprietorship concerns?

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.

Is audit required for sole proprietorship?

Tax audit under Income Tax Act is required for only few assessees.

Can a proprietorship be converted into LLP/Company?

Yes. A sole proprietorship concern can be converted into LLP or Company by following procedures laid down in respective Acts.

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