What is Sole Proprietorship Company?
An individual who wants to initiate the business on their own can choose this Sole proprietorship form of business. The individual person takes ownership and business management. There is no separate distinction between the entity and the owner. As a sole proprietor of a business, the owner receives all the profits as well as unlimited liability. Unlimited liability is nothing but the major financial issues of the business cover with debts and losses.
Even though sole proprietorship is not a legal entity but, the owner can use the legal name as to the legal entities.
Most of the business people choose this sole proprietorship for its easy business formation. The single-owner took full control over the business. So, the decision making is not so complex as other forms of entities. Corporate mode of tax payments and legislation processes are not following in the proprietorship. For formal business setup and running the proprietorship business requires only a few documentations.
Anyone can easily start the Proprietorship form of business. This business unlike Pvt Ltd does not involve other's participation. An individual who carries the business can become the owner of the firm. Both the owner and his/her business identity are not different. The owner has to take all responsibilities and/or liability of the business. There is no proper regulation followed for Proprietorship firm registration.
Vs Pvt Ltd Company
A Private Limited Company is registered under the Indian Companies Act, 2013. The liability of the Private Limited Company is a limited one. Share transfer of ownership in Pvt Ltd follows the transfer deed and stamp duty.
Future Business Expansion is simple through investments raised from Venture Capitalist funding, and Fundraising, etc.
Vs LLP
An LLP is a corporate body registered under the Limited Liability Partnetship Act, 2008. This form of business is similar to Pvt Ltd, but the owners are called Limited Liable Partners. This type of registration is suitable for particular forms of businesses where two or more persons are involved in the conventional partnership. Ownership Transfer is a risky process as compared to Pvt Ltd. Hence, the fund-raising is becoming a difficult part.
Vs Partnership Firm
A partnership is an agreement carried out by two or more partners. The partnership firm follows the regulation of the Indian Partnership Act of 1932. The fundraising process and business expansion are too limited. Partnership functions under unlimited liability which involves high risk of personal debt and loss.
Though it carries minimal compliance the business expansion requires all the legal compliance of a company.
Vs One Person Pvt Ltd
An Individual can easily start a One Person Company with the option of limited liability. OPC registration follows the norms of the Indian Companies Act, 2013. A single person can easily expand to a Private Limited Company under this business structure. Investment, Capital, and Fundraising are complex-free, but business expansion is a limited one. Minimal compliance and business conventions are preferable options.
Rajsoftech business consultancy offering the complex-free process for your fast and easy company registration anywhere in India. Though it involves multiple procedures and complicated compliances our expert team will help you to register and further proceedings of your company.
Apply for GST Registration
Opening a Bank Account
Apply for MSME
Filing Taxes
Passport Size Photo of the Individual
PAN Card of the Individual
Copy of Electricity Bill where the office opens
Rental / Sale Deed
Aadhar Card of the Individual
Address Proof (Bank Statement)
Rental Agreement
NOC
A Sole proprietorship is an unincorporated business run by an individual. However, it is an unregistered business form but a familiar one in our Indian business. Especially the small scale industries and micro-level business units can operate simply under this sole proprietorship without any legal identity. This form of business formation carries the advantage of secrecy. As a sole trader of business, the owner need not reveal the stock supply and account information to anyone. A sole proprietorship is an old-fashioned business form and, the owner can cross less tax burden than a registered legal entity.
What are the advantages and disadvantages of a Sole proprietorship firm?
- The comfort zone of running a business and self decision-making opportunities are available in this sole proprietorship form of business.
- Formal approval from partners, directors, and shareholders are not a headache in Proprietorship.
- There is no formal registration and fee required to initiate a proprietorship form of a firm.
- Free from the documentation and submission of the annual report is another advantage.
- A report of simplified tax records is enough for the owner to run a business entitled as a proprietorship business.
- Only small and medium-sized enterprises are suited to this form of business.
- The growth perspective of the sole proprietorship firm is too limited.
- When the owner wants to extend the business phase another additional registration is inevitable.
- Later, the proprietorship business form can change as a legal entity while the expansion.
- Sometimes, the unlimited liability will lead to the loss of personal assets are the common disadvantages in proprietorship business formation.
Description | Private Limited Company | Proprietorship Company | Limited Liability Partnership | Partnership Firm | One Person Company |
|---|---|---|---|---|---|
Legal Act | The company should be registered under Companies Act 2013 | There is no legal constitution framed by our government. | The company should be registered under Limited Liability Partnership Act 2008 | The registration of this firm is optional, but it's necessary to get registered by State Government | The company should be registered under Companies Act 2013 |
Registration Requirement | Registration under the Act is mandatory to set up business as a Private Limited Company | Registration under the Act is mandatory to set up business as a Private Limited Company | Registration under the Act is mandatory to set up business as a Private Limited Company | Both registered and unregistered partnerships are legal, but registered entity is preferred | Registration under the Act is mandatory to set up business as a Private Limited Company |
Separate Legal Entity | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Liability Protection | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Statutory Audit | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Number of Members | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Enter your text here... |
Ownership Transfer ability | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Foreign Participation | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Tax Rates | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Statutory Compliances | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |
Existence | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. | Lorem ipsum dolor sit amet, consectetur adipiscing elit. Fusce posuere efficitur viverra. |