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A Solo Proprietorship could be a kind of unregistered business entity that closely-held, managed and controlled by one person. Sole proprietary is that the most typical type of business in Bharat, utilized by most small and tiny businesses operative within the unorganized sectors. Proprietorships square measure terribly simple to begin and have terribly marginal regulative compliance demand for beginning and operative. So, it’s ideal for tiny businesses and first-time Entrepreneurs who would love to urge a style for business.
It is very easy to start as there are fewer legal formalities and lesser formation costs involved.
Who is a Proprietor?
A proprietor may be a living one that is that the owner of a Sole ownership business. A man of affairs should be a living person and can’t be a company or legal entity. The man of affairs and Sole ownership are one and also the same underneath the eyes of the law. Hence, in a proprietorship, the PAN and documents of the man of affairs are the premises for getting all different business registrations and licenses. just in case of any problems or liability within the Sole ownership business, the only man of affairs is controlled in-person to blame for the liability.
Common Registrations for proprietorship
As the identity of Sole proprietorship is established through varied different registrations and licenses, the subsequent are some of the common registrations that are obtained for proprietorship.
- MSME Registration: MSME or Udyog Aadhaar registration is often obtained within the name of the business to determine that the only real ownership is registered below the Ministry of small, tiny and Medium Enterprises.
- TAN Registration: TAN Registration should be obtained for the man of affairs from the taxation department if the man of affairs is creating regular payment payments whereby TDS deduction is needed.
- GST Registration: GST registration should be obtained if the man of affairs is commerce products or services that cross the GST turnover threshold limit for registration. In most states, GST registration is needed for service suppliers having annual revenue of quite Rs.20 lakhs and just in case of traders – annual revenue of quite Rs.40 lakhs.
- Import Export Code: Import Export Code or id est Code are often obtained from the DGFT within the name of the business – just in case of a proprietorship business enterprise export and/or import of products into Bharat.
- FSSAI Registration: just in case the proprietorship is concerned within the commerce of food products or handling of food products, FSSAI registration should be obtained from the Food Safety and customary Authority of Bharat within the name of the man of affairs.
Advantages of Proprietorship
- The biggest advantage in beginning a proprietorship (ownership) is that, the easy setup. Since there aren’t any registrations needed to begin ownership, the business owner will begin taking payments from customers and issue invoices while not having to fret regarding any registration.
- The other advantage of ownership is that it needs no further compliance in most cases. The PAN of the businessman and ownership area unit one and therefore the same. Hence, for Sole ownership with minimal business revenue – solely revenue enhancement comes back in type ITR-3 should be filed each year.
Disadvantages of Proprietorship
Starting a proprietorship (ownership) is extraordinarily straightforward. However, However, once the startup part, ownership doesn’t supply the man of affairs (proprietor) a number of advantages like separate legal entity, indebtedness ownership, company standing, fungibility, perpetual existence – that square measure fascinating options for any business.
- Separate Legal Entity: A Sole ownership doesn’t have a separate legal entity. Hence, gap a bank accounting within the name of a business are often a a lot of extended method for a ownership in comparison to an organization or LLP.
- Limited Liability Protection: A Sole ownership doesn’t offer the man of affairs with indebtedness protection. Hence, just in case any loss or liability is formed by the ownership business, the man of affairs would be control in person to blame for payment.
- Transferability: A ownership business is coupled to the PAN of the man of affairs. Hence, any license or registration obtained within the name of the ownership can not be transferred to the other person.
- Perpetual Existence: A Sole ownership business and also the man of affairs square measure one and also the same. Hence, the existence of the only real ownership is tied to the man of affairs. just in case the only real man of affairs isn’t any a lot of – the existence of the only real ownership business would additionally finish.
- Fundraising: A ownership business cannot raise equity funds from Angel Investors, working capital corporations and personal Equity funds. Banks even have restrictions on the number of cash they will lend to a Sole ownership business.