Sole Proprietorship | Business Finals

An Entrepreneur will always want to line up his business to earn more benefits. But when it involves legal documents and registrations, the work included is often very overwhelming. One is definitely confused between the sort of company he wants to include then the way to proceed with its registration. It calls certain tons of diligence. Amidst all this comes the concept of Sole Proprietorship. it's the only sort of business. it isn't considered a separate legal entity. this will be considered together of its advantages or disadvantages depending upon the individual perception. All the income and losses of the corporate are taxed on the owner's tax Return, sounds scary? Well again, perceptions! Described below is intimate of what exactly sole proprietorship is.

Its main feature is that it doesn't have a separate legal identity. it's completely under the owner's name, which is all the debts are under the owner. this will put the owner's personal assets in danger. Registration for a proprietorship is extremely easy and straightforward. All you would like to get are a couple of local licenses and permits (like PAN Card, checking account, TAN, Shop Establishment license, etc.) then you would like to register your name because of the sole proprietor. It doesn't follow complex procedures of voting and meetings as mandatory like in other sorts of business. The taxation procedure thanks to this feature is additionally simple since everything earned by the firm is taken into account because of the income of the Sole Proprietor. there's no unemployment tax involved.

Also, there's a choice of blending different businesses which is totally dependent upon the only Proprietor. there's no requirement of a separate name for the business since everything is under the name of Sole Proprietor. Although, there are not any restrictions to different names, and no registrations or filings are required intrinsically. However, it is quite common practice to convert a Sole Proprietorship into an LLP or other corporations to beat the danger of losing everything. One disadvantage of getting a Sole Proprietorship is receiving capital funds. Obtaining loans and getting funds may be a very hard job since the corporate has no separate identity under the law.

Therefore we will say that the advantages of the only proprietorship are:

· Whole Control -

Since the business belongs to the owner, he has complete control over his business without much legal intervention.

· Easy and cheap found out - 

Not many legal formalities except a few permits and licenses are needed.

· Easy Tax filings - 

Since the owner and business are equivalent, tax filings are done under the name of the owner, and capital earned by the business is shown because of the income of the owner.

Also, the disadvantages are:

· Personal Liability - 

Albeit having whole control over business seems an awesome idea but it doesn't sound that good when the corporate is suffering a loss.

· Raising Capital funds - 

It's easy to determine, no doubt. But it's really difficult to boost funds or get loans.

Due to these features, Sole proprietorship is taken into account as an incorporated sort of business since it's not registered. Therefore, before deciding to line up a Sole Proprietorship you ought to be completely conscious of its features, requirements, pros, and cons.