Some Benefits of Sole Proprietorship Firm

Some Benefits of Sole Proprietorship Firm

What is meant by a Proprietorship firm?

A proprietorship firm means (one person company ) the firm is no different from its proprietor, i.e, the owner. It is not a company so to say that it is not necessary for a proprietorship firm to be registered under the Companies Act or Establishment Act. (Example  Beauty parlour, barbershop, general store and sweet shop run by a single owner.)
The proprietorship has been defined as the simplest business form under which one can operate a business. It is not a legal entity and simply refers to a person who owns the business, is personally responsible for its debt. Like a company, it has a separate legal entity and offers limited liability protection.

What proprietorship firm name?

As a sole proprietor, you have a decision of utilizing your own name as your organization name or choosing a name exclusively for use in your business.

Some Benefits of Starting a Sole Proprietorship Firm 

  1. The owner has overall control and claims the owership stake
  2. Requires no minimum capital investment
  3. The Profit solely belongs to the proprietor
  4. The tax assistances avert double taxation
  5. The owner is accountable only to file an annual tax return and pay tax as an individual
  6. No separate tax for the firm

How do I start a sole proprietorship?

Mandatory Requirements to Start a Sole Proprietorship

  1. Aadhar Card. Aadhar number is now a necessity for applying for any registration in India. 
  2. PAN Card. You can't file your income tax return until you get a PAN. 
  3. Bank Account.one 
  4. Registered Office Proof. 
  5. Registering as SME. 
  6. Shop and Establishment Act License.
  7. GST Registration.

Who can choose for sole proprietorship?

Any person who wants to start a business with less investment can choose for this type of business form. It can be started in a time span of 10-15 days. Also the control in the business is solely in your own hand

Advantage of sole proprietorship.

  1. Less paperwork 
  2. Easier tax steup 
  3. Fewer business fee
  4. Straightforward banking.
  5. Simplified business ownership.
  6. It's harder to sell your business.
  7. No liability protection.
  8. Harder to get financing and business credit

Disadvantage of sole proprietorship

  1. Limitation of Management Skills
  2. Limitation of Capital
  3. Unlimited Liability
  4. Lack of Continuity
  5. Weak Bargaining Position
  6. Limited Scope for Expansion
  7. Risk of Wrong Decisions
  8. No Large-Scale Economies


Created & Posted by (Ramesh)

Senior Accountant at TAXAJ

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visit TAXAJ

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TAXAJ Corporate Services LLP

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