Sole proprietorship in India- Meaning, Advantage, Disadvantage, Necessity
- Thursday, November 19, 2009, 1:16
- Finance
The sole proprietorship is the oldest, simplest, and most common form of business entity. It is a business owned by a single individual. For tax and legal liability purpose, the owner and the business are one and the same. The proprietorship is not taxed as separate entity. Note that the earnings of the business are taxed at the individual level, whether or not they are actually in cash. There is no vehicle for sheltering income. For liability purposes, the individual and the business are also one and the same. Thus, legal claimants can pursue the personal property of the proprietor and not simply the assets used in the business.
Advantages of a Sole Proprietorship: Perhaps the greatest advantage of this form of business is its simplicity and low cost. You are not required to file with the government, nor are any legal charter required. The sole proprietorship form of business has other advantages:
- The owner or proprietor is in complete control of business decisions.
- The income generated through operations can be directed into the proprietor’s pocket or reinvested as he or she sees fit.
- Profits flow directly to the proprietor’s personal tax return; they are not subject to a second level of taxation. In others words, profits from the business will not be taxed at the business level.
- The business can be dissolved as easily and informally as it was begun.
These advantages account for the widespread adoption of the sole proprietorship in the India. Any person who wants to set up shop and begin dealing with customers can get right to it, in most cases without the intervention of government bureaucrats or lawyers.
Disadvantages of the Sole Proprietorship: This legal form of organization, however, has disadvantages:
- The amount of capital available to the business is limited to the owner’s personal funds and whatever funds can be borrowed. This disadvantages limits the potential size of the business, no matter how attractive or popular its product or service
- Sole proprietors have unlimited liability for all debts and legal judgments incurred in the course of business. Thus, a product liability lawsuit by a customer will not be made against the business but rather against the owner.
- The business may not be able to attract high-caliber employees whose goals include a share of business ownership. Sharing the benefits of ownership, other than simple profit-sharing, would require a change in the legal form of the business.
- Some employee benefits, such as owner’s life, disability, and medical insurance premiums, may not be deductible, or may be only partially
deductible from taxable income. - The entity has a limited life; it exists only as long as the owner is alive. Upon the owner’s death, the assets of the business go to his or her estate.
Is it necessary to register the Sole Proprietorship firm in India? : No registration is required for a sole proprietorship. You simply have to open a bank account with the name & style you want to work. But if you are liable for state VAT or service tax registration, then you have to obtain VAT and/or service tax registration. Further, for sole proprietorship, no separate income tax PAN is required. The PAN of the proprietor will be the PAN of the firm and proprietor will have to file income tax return in his personal name.
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I am proprietor of a firm engaged in export, situated in Delhi. I have an IEC number and sales tax number for my proprietorship firm. I want to shift my business to kolkata. What are the hassles and requirements for that? do i need to get fresh IEC or sales tax number there or whether amendements can be made in the existing ones.
I wish to start a Franchise of a HR agency under sole proprietorship. Can I do so without any legal registration.
what is limit for proprietor ship company for foreign tour please give also A/c head wise limit
Please give advice for proprietor ship company based in Maharashtra
Sir, Can we change proprietor name. My father is Sole proprietor of business. Now they transfer this business to me.
plz tell me what is the exat limit of income when i have to change my firm in to company? is there any limit for sole proprietorship firm
sir
tell me how to change the proprietor in assam of proprietorship firm
Please throw some light on the tax structure for sole propreitorship, pls
DEAR SIR , MY COMPANY IS A PROPREITORSHIP TRAVEL AGENCY IN INDIA. AFTER YEARS OF TRAVEL EXPERIENCE I HAD DECIDED TO START MY TRAVEL AGENCY . MY INVESTMENTS ARE VEW MEAGRE AND THE MONEY I GOT FROM PF AND SMALL FDs I HAD ACCUMULATED . I PLAN TO START THE SMALL TRAVEL AGENCY . HOW DO I MAINTAIN MY ACCOUNTS BEFORE TAX PURPOSES. I HOLD A PERSONAL PAN CARD. I HAVE PLANNED TO OPEN A CURRENT ACCOUNT IN A NATIONALISED BANK IN THE NAME OF COMPANY . HOW DO I MAKE BILLS AND RECEIPTS AND MAINTAIN A LEDGER WHEN IT IS A SMALL TARVEL AGENCY . ON THE OTHER HAND I BUY MY TICKETS FROM BIGGER TRAVEL AGENCIES AND MARK A SMALL SERVICE CHARGE WHICH IS MY INCOME. CAN YOU HELP ME SIR , AS HOW I AM TO MAINTAIN MY ACCOUNTS AND REGISTERS .
MY MAIL ID IS gilkrs@yahoo.com / mobile 9840049432.
THANKS AND REAGRDS
SUBBU
Dear Sir
I am a employee of the MNC and paying income tax regularly. Can I start a new proprietorship firm on my name?
Pls reply
Thanks
Balachandar K
9600921002
Dear Sir
I am a employee of the MNC and paying income tax regularly. Can I start a new proprietorship firm on my name?
Pls reply
Thanks
Balachandar K
9600921002
I wish to know the procedure / requirement for change in ownership in a proprietorship firm.
Dear sir,
I want to start a business as a sole owneship in andhra pradhesh. I want to do dealership business. How can I register my company. Is it necessary to register. If not so how can I get license to start
Dear Sir,
I won’t to confirm PAN Number of a service provider in Maharashtra, he is running a proprietorship firm. I have his VAT Tin Number and his company name.
Please guide how can I get his PAN Number.
Please reply
Regards
Sanjay Sharma
Like that of Limited Liability Partnership Firm, don’t we have the option of Limited Liability Proprietorship Firm here in India?
What are the various ways to save tax for a sole proprietorship firm?
can a proprietorship in father’s name be transfered (registered) to one of the son’s name on health grounds?
Hello Mis.Rinki I would like to talk to u regarding proprietorship company and IEC.Plz help me in this regard.
Wasim Akhtar
+917207649384
I am a partner in a firm and have some dispute with the other partner, the firm is in my control but have difficulty in operating the bank account.
1. Can i open a bank account in the firms name showing my self as the sole proprietor of the firm.
2. Can I continue to show this proprietorship account in the accounts of the partnership firm.
3. Can the bank open such a account, even after having full knowledge that the firm is a partnership firm.
Please advice the legal consequences.
Hi! I am planning to sell craft supplies & ready craft stuff online. Some craft supplies will be sourced from India & some imported from other countries. I will be operating frm my house. What accounting & legal documents I need to have before starting d business.
i wnt a project on this…………………………..
Does a Sole Proprietor of firm have to deduct tax on interest paid to an individual for borrowed capital.The turnover of the firm is high enough to have compulsory audit of accounts.If the answer is no,will it be same if borrowed capital is from spouse of the proprietor? Thanks
subbu wrote on 23 March, 2011, 15:12
DEAR SIR , MY COMPANY IS A PROPREITORSHIP TRAVEL AGENCY IN INDIA. AFTER YEARS OF TRAVEL EXPERIENCE I HAD DECIDED TO START MY TRAVEL AGENCY . MY INVESTMENTS ARE VEW MEAGRE AND THE MONEY I GOT FROM PF AND SMALL FDs I HAD ACCUMULATED . I PLAN TO START THE SMALL TRAVEL AGENCY . HOW DO I MAINTAIN MY ACCOUNTS BEFORE TAX PURPOSES. I HOLD A PERSONAL PAN CARD. I HAVE PLANNED TO OPEN A CURRENT ACCOUNT IN A NATIONALISED BANK IN THE NAME OF COMPANY . HOW DO I MAKE BILLS AND RECEIPTS AND MAINTAIN A LEDGER WHEN IT IS A SMALL TARVEL AGENCY . ON THE OTHER HAND I BUY MY TICKETS FROM BIGGER TRAVEL AGENCIES AND MARK A SMALL SERVICE CHARGE WHICH IS MY INCOME. CAN YOU HELP ME SIR , AS HOW I AM TO MAINTAIN MY ACCOUNTS AND REGISTERS .
MY MAIL ID IS gilkrs@yahoo.com / mobile 9840049432.
THANKS AND REAGRDS
SUBBU
RESENT FOR ADVICE – THANKS
subbu wrote on 23 March, 2011, 15:12
DEAR SIR , MY COMPANY IS A PROPREITORSHIP TRAVEL AGENCY IN INDIA. AFTER YEARS OF TRAVEL EXPERIENCE I HAD DECIDED TO START MY TRAVEL AGENCY . MY INVESTMENTS ARE VEW MEAGRE AND THE MONEY I GOT FROM PF AND SMALL FDs I HAD ACCUMULATED . I PLAN TO START THE SMALL TRAVEL AGENCY . HOW DO I MAINTAIN MY ACCOUNTS BEFORE TAX PURPOSES. I HOLD A PERSONAL PAN CARD. I HAVE PLANNED TO OPEN A CURRENT ACCOUNT IN A NATIONALISED BANK IN THE NAME OF COMPANY . HOW DO I MAKE BILLS AND RECEIPTS AND MAINTAIN A LEDGER WHEN IT IS A SMALL TARVEL AGENCY . ON THE OTHER HAND I BUY MY TICKETS FROM BIGGER TRAVEL AGENCIES AND MARK A SMALL SERVICE CHARGE WHICH IS MY INCOME. CAN YOU HELP ME SIR , AS HOW I AM TO MAINTAIN MY ACCOUNTS AND REGISTERS .
MY MAIL ID IS gilkrs@yahoo.com / mobile 9840049432.
THANKS AND REAGRDS
SUBBU
DEAR SIR ,
I PLAN TO START THE SMALL TRAVEL AGENCY . I WANT TO PROCEDURE HOW TO START A TRAVEL AGENCY & WANT TO KNOW ABOUT AGENCY NAME, AGENCY PREMISES, REGISTRATION OF AGENCY, MAINTAIN MY ACCOUNTS, PAN CARD, OPEN A CURRENT ACCOUNT IN THE NAME OF COMPANY . HOW DO I MAKE BILLS AND RECEIPTS AND MAINTAIN A LEDGER & MANY MORE. PLEASE HELP ME SIR.
DEAR SIR ,
I PLAN TO START THE SMALL TRAVEL AGENCY . I WANT TO KNOW PROCEDURE HOW TO START A TRAVEL AGENCY & WANT TO KNOW ABOUT AGENCY NAME, AGENCY PREMISES, REGISTRATION OF AGENCY, MAINTAIN MY ACCOUNTS, PAN CARD, OPEN A CURRENT ACCOUNT IN THE NAME OF COMPANY . HOW DO I MAKE BILLS AND RECEIPTS AND MAINTAIN A LEDGER & MANY MORE. PLEASE HELP ME SIR.