Sole Proprietorship refers to a specific business structure characterized by single ownership, control, and management. A sole proprietorship is solely owned by an individual, known as the Sole Proprietor, who is both the driving force behind the business and the recipient of its profits. This legal setup blurs the line between the proprietor and the business itself, as they are one and the same. Remarkably, no formal registration is obligatory for a Sole Proprietorship.
Registration of a Solo Proprietorship Firm:
In India, specific regulations and rules governing the registration of a sole proprietorship firm are absent. Recognition for a sole proprietorship’s existence is largely conferred through mandatory tax registrations aligned with prevailing norms. Notably, these tax registrations may encompass GST Registration and/or SSI/MSME/Udyam Aadhar Registration, obtained under the proprietor’s name. These registrations validate the sole proprietor’s engagement in business activities within the framework of a sole proprietorship.
If you want to start and run a business on your own, you need to be an Indian citizen. There is no age requirement to register as a sole proprietor. You can be young or old as long as you meet the age limit for entering into an agreement (generally 18 years or older).
You must be the sole proprietor of the business and have full authority and control of its operations and decisions.
This type of business is suitable for a small or medium-sized business that can be run by a single person.
This type of business is often chosen by individuals who are in the trading, services or manufacturing, or have a professional practice.
A sole proprietorship is operated by a solitary individual, which confers the advantage of streamlined management and swift decision-making. This ensures the promptness of decision-making processes consistently.
Sole proprietors are viewed as singular entities, leading to personal tax payment. This distinction sets them apart from other business structures, as they are consistently exempted from corporate taxes. Such an exemption significantly alleviates the overall tax burden.
The process of winding down your business is streamlined and efficient. It involves the straightforward cancellation of the entity's name and tax registration details, making the liquidation procedure swift and uncomplicated.
Sole proprietorship registration is characterized by its expedited process, often finalized within as little as 1 day.
Government registration fees remain modest, while our professional charges begin at Rs.1999. The slight fluctuations in fees are influenced by factors such as the business type and specific registration prerequisites.
Basis of comparison |
Pvt. Ltd |
Partnership |
Proprietorship |
LLP |
OPC |
|---|---|---|---|---|---|
Ownership
|
Separate legal entity.
|
Two or more members
|
Single individual
|
Minimum of two designated partners
|
Sole director
|
Liability
|
Limited liability
|
Unlimited liability
|
Unlimited liability
|
Limited liability
|
Limited liability
|
Compliance and regulations
|
Requires compliance with the Companies Act
|
Fewer compliance requirements
|
Minimal compliance requirements
|
Requires compliance with the LLP Act
|
Fewer compliance requirements
|
Decision making and control
|
Decision making is structured
|
All partners have an equal say in decision making
|
The proprietor has decision-making authority
|
The LLP agreement determines decision-making powers.
|
The sole shareholder has complete control over decision making.
|
Continuity of the firm
|
Continuity is not affected
|
Dissolves upon the death or retirement of any partner
|
Continuity is a challenge.
|
Continuity is not affected by changes in partners.
|
Conversion to a private limited company is required
|
Taxation
|
Corporate tax is applicable
|
Partnerships are not taxed separately
|
The proprietor is personally taxed
|
LLP is taxed as a separate entity,
|
OPC is taxed as a separate entity
|
Funding and Investment
|
Easier to raise funds
|
Partners contribute capital to the partnership.
|
Funding is primarily limited
|
Partners contribute capital to the LLP.
|
Funding is limited to the capital
|
Conversion and expansion
|
Can easily be converted
|
Conversion is complicative
|
Conversion may require compliance
|
Can easily be converted
|
Can be converted on certain criteria
|
