Sole Proprietorship Formation
This business structure permits the sole proprietor to report business income and expenses in his individual tax return. Hence there is no separate Income Tax filings required. However all other compliances relating to indirect tax, labour/employees, business licenses, accounting etc. is to be complied. Sole Proprietorship is beneficial for entrepreneurs or small business type (Easy-Self-Start set up) with lesser investment and compliances. Initially, such form of business can also be got converted to Partnership Firm or Private Limited Company in future depending upon the business requirements. Also, the owner is entitled to all the profits of the firm. A sole proprietorship can best be summed up by the phrase “Self-Business with an option to use self-name or any business trade name”. In India, many businesses like retail shops, catering, transport, printing, supply, manufacturing, agency, trading, professional services, commission agents, marketing and other services are being conducted under this business structure for many decades.
Legaljini can help you with the establishment of the sole proprietorship by obtaining relevant registration.
Advantages of Sole Proprietorship Formation
The main advantage to form a sole proprietorship is that the formation is very easy. It is less complicated and it does not involve costly legal expenses as compared to formal corporations. In other words, it is the easiest way to start a business with minimum formalities.
The sole proprietorship can be named after the owner, or any good trade name which can help business and can be used to grow business, subject to availability under Trademark and/or Domain Registry. The sole proprietor can choose any name of his choice and it should not infringe a registered trademark.
The owner of a sole proprietorship is not required to file a separate tax return. Instead, they will list business information and figures within their individual tax return. This saves additional costs on accounting and tax filing. The business will be taxed at the rates applied to personal income and not as per corporate tax rates.