Business Formation Services
The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts, Profit and Losses.
In this type of business, there are no specific business taxes paid by the company. The owner pays taxes on income from the business as part of his or her personal income tax payments.
Sole proprietors need to comply with licensing requirements in the states in which they're doing business, as well as local regulations and zoning ordinances. The paperwork and formalities, however, are substantially less than those of corporations, allowing sole proprietors to open a business quickly and with relative ease - from a bureaucratic standpoint. It can also be less costly to start a business as a sole proprietor, which is attractive to many new business owners.
Advantages of a Sole Proprietorship
* A sole proprietor has complete control and decision-making power over the business.
* Sale or transfer can take place at the discretion of the sole proprietor.
* No corporate tax payments
* Minimal legal costs to forming a sole proprietorship
* Few formal business requirements
* Sole proprietor manages the business
* No need to file income tax return if total income is below 2,50,000/-
* No need to pay tax if income upto 7,00,000/- after deduction
Disadvantages of a Sole Proprietorship
* The sole proprietor of the business can be held personally liable for the debts and obligations of the business. Additionally, this risk extends to any liabilities incurred as a result of acts committed by employees of the company.
* All responsibilities and business decisions fall on the shoulders of the sole proprietor.
* Investors won't usually invest in sole proprietorships.
Only one person is required to start a Proprietorship and a Proprietorship can have only one promoter.
You need to be a Citizen and Resident of India having PAN Card and Valid Address Proof ( Voter ID, Passport , Driving License or Aadhar)
1. PAN 2. Address Proof ( Voter ID, Passport, DL or Aadhar) 3. Electricity bill + Rent agreement where you want to run your business.
There is no limit on the minimum capital for starting a Proprietorship. Therefore, a Proprietorship can be started with any amount of minimum capital.
Mycorporation has tied up with various banks. We will guide you through the process and help you open a bank account.
No, the Proprietorship firm and the Proprietor are one and the same. The PAN Card of the Proprietor will be the PAN Card of the Proprietorship business and There will be no separate legal identity for the business. The assets and liabilities of the Proprietorship business and the Proprietor will also be one and the same.
Proprietorship firms do not have a Certificate of Incorporation or Certificate of Registration. The identity and legitimacy of a Proprietorship firm is established by registering with the various Government authorities.
A business operated by proprietorship firm cannot be transferred to another person, Intangible assets like Government approvals, registrations, etc., cannot be transferred to another person because PAN can not be changed
Proprietorship firms are business entity that are owned, managed and controlled by one person. So Partners cannot be inducted into a Proprietorship firm.
Proprietorship firms are business entity that are owned, managed and controlled by one person. So Proprietorship firms cannot issue shares or have investors.
Proprietorship will have to file their annual tax return with the Income Tax Department. Other tax filings like service tax filing or VAT/CST filign= may be necessary from time to time, based on the business activity performed. However, annual report or accounts need not be filed with the Ministry or Corporate Affairs, which is required for Limited Liability Partnerships and Companies.
It is not necessary for Proprietorships to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criterion.
MyCorporation will understand your business requirements and help you start a Proprietorship by obtaining the relevant registrations. We will help obtain the necessary registrations to help the Proprietor open a bank account in the name of the business, thereby proving an identity for the business.
Yes, there are procedures for converting your Proprietorship business into a Company or a LLP at a later date. However, the procedures to convert a proprietorship business into a Company or LLP expensive and time-consuming, PAN and all Relevant registration will be applied again and hence it is wise for many entrepreneurs to consider and start a LLP or Company instead of a Proprietorship.