Sole proprietorship

  • Ease of formation
  • Quick decisions and flexibility of operations
  • Cost effective
  • Sole proprietorship

    Sole Proprietorship is a one-person business who possesses, manages and controls the business. While merchandising tax and legal liabilities of the owner and the business are one and the same. The proprietorship is not taxed as separate entity. Proprietor must remind that the earnings of the business are taxed at the individual level, which means no separate filing of income tax returns for their business.

    In proprietorship the individual's assets being covered as business holdings. Therefore, legal claimants can pursue the personal property of the proprietor and not simply the assets used in the business.

    Benefits of Sole Proprietorship

    Ease of formation

  • It is not required to go through elaborate legal formalities, which furnishing the formation is very easy.
  • There is no agreement is to be needed to start the business.
  • The registration of the firm is not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration.
  • Quick decisions and flexibility of operations

  • The owner or proprietor is in complete control of the business decisions.
  • The income generated through operations can be directed into the proprietor's pocket or reinvested as he or she sees fit
  • Cost effective

  • Greatest advantage of this form of business is its simplicity and low cost for formation.
  • Proprietor not required to file with the government, nor are any legal charter required for registration.
  • Tax

  • Profits flow directly to the proprietor's personal tax return. They are not subject to a second level of taxation.
  • Profits from the business will not be taxed at the business level.
  • Insolvent

  • The business can be dissolved as easily and informally as it was begun.
  • NRIs and PIOs can form a proprietorship business with proper approval from RBI. However, the profits earned cannot be sending back.
  • Limitations

  • Unlimited liability
  • Limited capital
  • Limited life
  • Authorization of entity