Easy to Establish

A sole proprietorship firm or business does not have any specific registration requirements, and the company uses the proprietor's legal identity. Hence, one can start a proprietorship without any tax registration. With the help of PAN and Aadhaar, the promoter can obtain Udyog Aadhaar/MSME Registration and Trademark/Brand Registration optionally to create and protect the business's identity.

Easier to Operate

As one person is at the helm of affairs, it is easier to operate as the person will be the sole decision-maker. There is no concept of a members or board meeting or approval from any other person in a proprietorship business.

Sole Beneficiary of Profits

Besides a sole proprietorship and one-person company, no other business entitles the owner as of the sole beneficiary of profits. In all other entities such as partnership, Limited Liability Partnership or Company, a minimum of at least two persons are re.

Compliance & Taxation

Since a proprietorship company is not registered with any governmental authority such as the Ministry of Corporate Affairs (MCA), the compliance requirements are minimal.

Further, the proprietor/owner would only have to file his income tax returns if the firm has a taxable income of more than INR 2.5 lakhs p.a.

In the case of proprietors, attaining 60 years of age or more during the financial year, income tax filing would only be required if the taxable income is more than INR 3 Lakh.

In the case of proprietors, attaining 80 years of age or more during the financial year, income tax filing would only be required if the taxable income is more than INR 5 Lakh.

Finally, the sole proprietor or owner can also reduce the income tax liability by availing of the following deductions:

• Contributions to provident fund (PF), life insurance premium, subscription to certain equity shares or debentures etc.
• Assistance to certain recognised pension funds.
• Contribution to notified pension schemes.
• Medical insurance premium for self and family.
• Caring for a family dependent who is ailing with a specific disability.
• Medical expenses.
• Repayment of loan availed for higher education.
• Payment of rent.
• Income from royalty.
• Royalty on patents.
• Disabled persons.