The choice of a business entity will depend on its object, nature and size of the business of individual which is varied from person to person and their perception of doing business. there are various factors which are considered before choosing a business organization structure. Some of the factors may be as follows:-
- Nature of activity which is to be done under business
- Requirement of capital for business
- Independence degree level of proprietor
- Consideration of tax which is required to be paid under the business.
There is no standard formula for choosing the particular type of business organization.
The arrangement which follows the process of organizing the factors to conduct a business in an optimized manner is known as business organization. means all those steps that need to be undertaken for establishing and maintaining relationship between men, material, and machinery to carry on the business efficiently for earning profits.
Choosing a business form for entity or individual is crucial to a successful organization.
A sole proprietorship is a type of entity that is managed and run by one person as an owner and in which there is no legal distinction between the owner and the proprietorship. It is not mandatory to work ‘alone’ if you are in sole proprietorship—it is possible for the sole proprietor to hire other people for help in work.
The most common type of business form in India is sole proprietorship which is used by the individuals for earning their daily bread. Basically, this type of business entity is come under small businesses of India which are operated in the sector which are unorganized.
There is no prescribed legal formalities to starting or operating sole proprietorship, only appropriate or proper licensing to conduct a business and registration of business name if it differs from the sole proprietorship is required.
Question arise who can start a sole proprietorship:-
In India there is no bar who can start proprietorship ,any Indian citizen having valid pan can start and operate sole proprietorship in India ..because there is very less compliance or less government intervention and there is also need of any specific entity registration proof .only the proprietor pan is enough for registration and compliance.
Who can be a proprietor?
- Natural person having valid pan and identity proof.
- Indian citizen
Any business enterprise can be owned or organized in several different forms .each form of organization has its own ,merits and demerits.
ADVANTAGE OF SOLE PROPRIETORSHIP:-
1) Less Formalities During Formation.
2) No Government Intervention.
3) Less Wastage Of Time For Taking Various Approvals.
4) Limited Capital Required According To Own Wish.
5) Pan Of The Proprietor And Proprietorship Is Same.
6) Current Account Can Easily Opened In The Name Of Propreitorship In Case You
7) Have A Registration In Name Of Proprietorship.
8) The Owner Reports Income/Loss From This Business Along With Is Personal Income Tax Return In Form Itr- 3 Every Year.
9) No Sharing Of Profit.
DISADVANTAGES OF SOLE PROPRIETORSHIP:-
- As We Know The Proprietor And Proprietorship PAN Is Same So It Is Clear That Sole Proprietorship Is Not A Separate Legal Entity From Its Proprietor.
- Personal Property Of Proprietor Is Also Affected In Case Of Any Loss Arise In Sole Proprietorship.
- Because Of Proprietor Pan Is Used In The Business For All The Compliance Or Registration It Is Not Easy To Transfer The Business To Some One Else If Required Or Needed In Future.
- There Is No Chance Of Perpetual Existence In Case Of Sole Proprietorship Because Proprietor And Proprietorship Both Are Same. In Case Of Death Of Proprietor -Proprietorship Is Also Come To Its End..
- Not Easy To Get Fund From Outside. Because No One Rely On You Easily.
- Limited Scope Of Recognition.
HOW TO REGISTER A SOLE PROPRIETORSHIP IN INDIA?
There Is No Specific Registration Process Or Procedure Prescribed By The Government For The Registration Or Operation Of Sole Proprietorship In India.
Any Individual Can Start Their Business Under Sole Proprietorship Form By Taking One Or More Registration Of Business License Or Tax License Like As Follows:-
A) MSME Registration
B) GST Registration
C) Trademark (In Case You Want No One Can Use Your Business Name Take This Registration)
D) Shop and Establishment Licence
E) FSSAI Registration ( In Case Proprietor Is Doing Business Of Food And Related Articles)
F) Import And Export Code ( In Case Proprietor Is Doing Business Of Import Or Export)
G) Copyright (In Case You Want To Work Of Writing, Artistic, Literature).
DOCUMENTS WHICH ARE REQUIRED FOR SOLE PROPRIETORSHIP REGISTRATION:-
1) Pan Card Of Proprietor.
2) Aadhaar Card Of Proprietor.
3) Trade Name Or Proprietorship Name.
4) Email Id And Mobile Number For Communication Purpose.
5) Utility Bill Or Rental Agreement With NOC For Address Proof.
Income Tax Rate: – The Owner Reports Income/Loss From This Business Along With Is Personal Income Tax Return In Form ITR- 3 Every Year. The Rate Of Income Tax Is Same For Sole Proprietorship As Individual Income Tax Rate.
Due Date Of Sole Proprietorship Income Tax Return Is 31st July As Same As Individual ITR Date In Case No Audit Required Of Sole Proprietorship.
On The Other Hand In Case Audit Is Required Of Sole Proprietorship The Due Date Of Filing ITR Is 30th September
In small businesses specially trading, professional services, rendering personal services sole proprietorship is predominant. The business for which sole proprietorship is suitable are as follows:-
As we know the sole proprietorship is benefited for small traders so we can say that it would like to get a taste for business for a first time entrepreneur who love his/her passion of doing something on own without doing work under someone else. Because as compared to choose any other business organization sole proprietorship is a easy form of business where government intervention is very less and starting and operating of this business is very smooth
The sole proprietor receives all profits from business and bear all the losses of the business on its own.
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