Thinking of starting a new business, sole proprietorship firm is theultimate option for you. Let us give you a brief about what a sole proprietorship firm is and also how it can be beneficial or non beneficial.
A sole proprietorship is an oldest and the most common form of an unincorporated business widely popular among the unorganized sector, mainly small traders and merchants.It is a one-man organization where a single individual owns, manages and controls the business. The owner of a firm is known as a sole proprietor.
Salient Features of Sole Proprietorship:
- Ease of formation is the most significant characteristic because prospective business owners need not to go through elaborate legal formalities. It does not require filing any special forms with federal, state or local agencies to set up a sole proprietorship. There is no formal registration process, agreement andno special fee required to start the sole proprietorship as registration of the firm is not essential. However, the owner may be required to acquire a license exact to the line of business from the local administration.
- The capital is normally supplied wholly by the owner himself. He depends mainly on his own savings and business profits. However, if extra funds are required, it can be augmented by borrowing.
- In sole proprietorship, owner is the only master of business and has a full control over all the aspects of business. He has the complete liberty to takes all the decisions and actions though he may take the services of a few others to perform the everyday activities.
- Being the single owner of the firm, the proprietor alone enjoys all the benefits or profits earned and bear the losses incurred by the firm.
- The firm has no separate business entity between the proprietor and the business concern and no legal existence separation from owner.
- The liability of the owner is unlimited means it extends beyond the capital invested in the enterprise. Private property of the owner can also be used to meet the business requirement to external parties in case the enterprise incurs any losses.
- Limited life i.e. the existence of a sole proprietorship business is based on the life and good health of the proprietor and illness or death of the sole owner may break the existence of business. Therefore, the continuity of business operation is uncertain.
Advantages of Sole Proprietorship:
- Easy to start and low operating cost
- Maximum work incentives
- Secrecy of business
- Relatively inexpensive even over the long-term
- Centralized decision making entrepreneur
- Reduced constitution cost
- Tax advantage
- Simple maintenance of corporate accounting
- Speed decisions and flexibility of operations
Disadvantages of Sole Proprietorship:
- Limited proficiency and growth potential
- Unlimited personal liability
- Taxed as a single person
- Limited resources
- Limited life expectancy of business
- Unbounded liability for debts
- Limited ability to raise funds and capital
- Maintaining good quality employees can be challenging
Therefore, it could be imagine as a business that is so easy to establish and run. Businesses which engage small financial resources, minimum capital requirement and moderate risks are highly suitable for this simplest form of organization.
As such sole proprietorship firm is not required to be register with the government but there is certain business licenses required while starting a sole proprietorship firm. These licenses depend on the type of business you are going to run like product based business or service based business.
Based on the type of business, you may require the following things or easy registrations to acquire for establishing the sole proprietorship firm in India.
- Proprietor PAN Card
- TAN (Tax collection and Deduction Account Number)
- Service tax registration
- Business involved in manufacturing or trading
- VAT /CST registration
- Shops and Establishment license
- Business involved in providing services
- Importer and Exporter code
- Professional tax
- ESI (employee state insurance registration)
Dealing with proprietorship firm registration can be a hectic and tedious job while one is already pre-occupied with business initiation. We at LexOracle will handle the entire registration process and get you requisite documents to let your ideas fly!
Q) What is a sole proprietorship?
Q) Can a sole proprietorship use the word “company” in the trade name?
Q) Can I convert my sole proprietorship to a different business structure, e.g., a corporation, and continue to use the name I developed as a sole proprietorship?
Q) Can I convert my sole proprietorship to a different business structure, e.g., a corporation, and continue to use any licenses or permits that I held as a sole proprietor?
Q) What are the liabilities of sole proprietors?
Q) How are they taxed?
How it is done?
Steps to be followed to do easier and timely Sole Proprietorship registration:-
Step1:- Let us know your need, whether you require VAT-TIN, Service Tax or any license etc
Step2:- Make required payment
Step3:- Submission of requisite documents
Step4:- Sit back and relax! We’ll handle everything rest
Click on apply now and get it done right away!!
LexOracle provides Sole Proprietorship Registration with VAT/CST registration, Proprietor PAN Card, Import and Export code, TAN registration, Professional tax, Shops and Establishment license, Service tax registration and everything with all-inclusive packages. So send your query now and get it done right away!
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