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A sole proprietorship is a business owned, managed and controlled by one person. It is one of the most common forms of business inIndia, used by small businesses operating in the unorganized sectors. Sole Proprietorship, unlike other forms of company, is not a separate legal entity. Proprietorships are very easy to start and have very minimal regulatory compliance requirement for getting started. Therefore, proprietorship's are suited for unorganized, small businesses that will have a limited existence.

Incorporating a proprietorship will be very easy with ebizfiling support team.

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Particulars Proprietorship Partnership Limited Liability Partnership One Person Company Private Company Public Company
Legal Entity No No Yes Yes Yes Yes
Limited Liability No No Yes Yes Yes Yes
Transferability No No Yes No Yes Yes
Tax benefits Low High High Moderate Moderate Moderate
Investor Preference No Low High No Moderate High
Statutory Audit Not Mandatory Not Mandatory Contribution >25 lacs or Turnover >40 lacs Mandatory, irrespective of share capital and turnover Mandatory, irrespective of share capital and turnover Mandatory, irrespective of share capital and turnover
Registration No No, but recommended Yes Yes Yes Yes
No. directors/partners One Min.2 Max.20(in case of Banking 10) Min.2 Designated Partners, Max. One Min. 2- Max. 15 Min. 2- Max. 15
Members No No No One Min. 2- Max. 200 Min. 7- Max. No limit
Annual Fillings No No Yes Yes Yes Yes
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Few points to make your decision easy

Easy To Form And Wind Up

  • Practically no minimum capital requirement
  • No legal formalities, easy to form and wind up

Quick Decisions

  • Controlled by single individual
  • Easy decision making

Better Control

  • Full control over all activities of the business

Maintenance Of Secrecy

  • Can keep his plans to himself

Close Personal Relations

  • Better personal contacts customers and employees
  • Helpful to understand likes, dislikes and preferences of customers

Encourages Self-Employment

  • Owner himself is self-employed
  • Leads to creation of better employment opportunities

A small procedure for your quick understanding

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Who can start a sole proprietorship?

Any Indian citizen with a current account in the name of their business can start a sole proprietorship. Registration may or may not be required, depending on what business you are planning to establish. However, to open a current account, banks typically require a Shops & Establishments Registration.

What businesses are commonly run as sole proprietorships?

Most local businesses are run as sole proprietorships, from your grocery store to a fast food vendor, and even small traders and manufacturers. This is not to say that larger businesses do not operate as sole proprietors. Even some jeweler shops are sole proprietors, but this is not recommended.

How does a sole proprietorship differ from other company forms?

A sole proprietorship differs from other forms of business in several ways. The chief ways a sole proprietorship is different include:

  • Sole proprietorships are the least complex and cheapest form of doing business
  • Sole proprietorships require no formal paperwork to set up and don't need to be registered with the state
  • Sole proprietorships do not shield individuals from liability for their business debts.

What documents are needed for opening a current account in the name of my sole proprietorship?

To open a current account, you need proof of the existence of your business. Many banks will ask for MSME registration In addition, you will need a PAN card and address and identity proofs.

What if I wish to convert from sole proprietorship to private limited company or Limited Liability Partnership?

You can always choose to do so. The procedure is very simple. It is very common for sole proprietors to convert into partnerships and private limited companies at a later stage. Get in touch with our team at info@ebizfiling.com or call us @+91 8262 990 990.

Still have confusion?

Don’t worry!! Our expert will help you to choose best suitable plan for you. Get in touch with our team to get all your queries resolved. Write us on info@ebizfiling.com or call us @+91 8262 990 990.

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