Sole Proprietor
A Sole proprietorship can be explained as a kind of business or an organization that is owned, controlled and operated by a single individual who is the sole beneficiary of all profits or loss, and responsible for all risks. It is a popular kind of business, especially suitable for small business at least for its initial years of operation.
Key Attributes
| Duration | Not specified basically till the life of the proprietor. |
|---|---|
| Single Ownership | A single individual always owns sole proprietorship form of business organization |
| No sharing of Profit and Loss | All the profits and losses are of the owner |
| Unlimited Liability | Unlimited personal liability |
| One-man’s Capital | Finance obtained by the owner |
| One-man Control | The controlling power is with the owner who takes all the decision to run the business. |
| Less legal formalities | There are almost no legal formalities even registration is not a mandatory process. |
| Taxation | Return is to be filed/Income of sole proprietorship is counts as the personal income of the owner. |
Advantages of sole proprietor:
- start-up costs are low
- easy to run business
- you own all the profits
- you’re the boss
- easy to change your legal structure anytime
Disadvantages of sole proprietor:
- you have unlimited liability for debts as there’s no legal distinction between private & business assets
- difficulty in obtaining funds
- income of sole proprietorship is counts as the personal income of the owner.
- duration of sole proprietor is till till the life of the owner
Procedural Aspects
- Registration is not mandatory for sole proprietor
- Sole proprietor can register with MSME or the concerned municipal corporation
- Opening of Bank Account
- Pan card of the proprietor will be pan of firm
- GST registration, if any
