What is a Proprietorship?
A sole proprietorship also referred to as a sole trader or a proprietorship, is an unincorporated business that has just one owner who pays personal income tax on profits earned from the business by Edge Legal.
A sole proprietorship is the easiest type of business to establish or take apart, due to a lack of government regulation. As such, these types of businesses are very popular among sole owners of businesses, individual self-contractors, and consultants. Many sole proprietors do business under their own names because creating a separate business or trade name isn’t necessary.
- Ease to Start- A sole proprietorship is easy to start in India because there is no such registration required to start a sole proprietorship business.
- Ease of compliance- If there is no statutory implication then only an Income Tax Return needs to submit by a sole proprietorship.
- Ease of dissolution- Dissolution of proprietorship will very easy because it can be dissolved at any time without any regulatory hurdle.
- Liability protection: A sole proprietorship is basically business by an individual so all liabilities belong to the sole proprietorship will be liabilities of the proprietor.
- Lifespan: The existence of the sole proprietorship is tied to the proprietor hence it would cease to exist with the proprietor.
- Fundraising: Fund can only arrange through a bank and financial institution up to a certain limit fixed by that institution.
Due to the disadvantages mentioned above, this registration will be suitable only for small businesses and the unorganized sector with a limited period of existence.
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