Solo Proprietorship

A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities. In short you are the fortune maker of your own Kingdom.
Sole proprietorship is one-man organization where a single individual owns, manages and controls the business.Proprietorship is the only type of business entity that can be registered and operated by one person.

There are only two things you need to do for starting a sole proprietorship business in India.

• 1. Choose a business name.
• 2. Select a location as the place of doing business.

EVERY SINGLE HOUR YOU PUT IN IS YOURS AND YOURS ONLY

You set your own hours. You can choose to work 4 hours a day or 16 hours a day. The choice lies with you and not anybody else. You are your own boss, which means you are accountable only to yourself. Setting your own hours is a huge advantage in terms of designing your optimal lifestyle. You know yourself best and you can build a schedule that is the most efficient for you. You don’t have to show up at the office in the morning all groggy and dreary if you don’t want to. It’s all up to you!

YOU ARE IN CHARGE OF YOUR OWN INCOME

To some people, this may seem like a con. The insecurity of having to source for your own income without a stable job may seem daunting. However, if you are able to develop your business past a certain point, the sky will be the limit in terms of the money you can make, instead of your monthly salary being dictated by someone else through words on a contract. At the start, being your own boss will probably not make you as much as you used to. But, the huge advantage is that you keep every single cent you make and your salary is not capped by an employer.
And you don’t get fired!!!

YOU ARE RESPONSIBLE FOR YOUR OWN SUCCESS

When you are own boss, you are the difference maker in your business. Whether it succeeds, or fails, all lies on your own shoulders. When working for someone else, you probably don’t feel that sense of ownership in your own work. That is because you feel that whether you work hard or not doesn’t truly make a difference to you other than the fact that you wish to perform well to get a promotion.
However, when working for yourself, you have to work hard to succeed. You matter, because you are the business.

YOU LEARN AND GROW AS A PERSON

Being your own boss and starting your own business is a huge risk. When working for someone else, you most likely will be doing repetitive work because you tend to specialise. This means that you reach a salary cap and a point where you are no longer challenged. But when you are an entrepreneur, you learn as you go along making mistakes and being challenged. By going through all that adversity and overcoming them, you grow as a person, becoming tougher and more resilient. Even when you fail, you will learn and do better the next time.
However, when working for yourself, you have to work hard to succeed. You matter, because you are the business.

YOU LEARN AND GROW AS A PERSON

Difference between proprietorship, partnership and company form of business :

Types of Entity	Sole Proprietorship	Partnership	Company
No. of Member	One	Minimum two Maximum Fifty
Personal Liability	Unlimited	Unlimited	Limited
Administrative Requirement	Relatively few	Moderate	High
Management Control	Full and Single Control	Control by partners	Shared By Directors and Members
Term	Terminated when Proprietor ceases doing business or upon death	Terminated at will/death/Insolvency	Perpetual
Capital Raising	Individual provides Capital	Shared by Partners	Issue of share and stock
Registration	Not Required	Not Compulsory	Under Companies Act

SOLE PROPRIETORSHIP OR OPC (A THINK TANK ANALYSIS)

Types of Entity	Sole Proprietorship	One Person Company
Registration	Not Compulsory	Compulsory under companies act
Status of legal entity	Not a separate legal entity	Separate Legal Entity
Limited	Unlimited	Liability
Maximum member	One	One
Term	Terminated when Proprietor ceases doing business or upon death	Perpetual
Taxation	Taxed as an Individual	Tax on company plus cess and surcharge
Annual Returns	No Annual Return filing	Annual Return filing with ROC

PROS OR CONS (A MIND CHURNING CONCEPT):

PROS:

• It is one of the easiest form of business entity to start with minimal formalities.
• There is no government regulatory paperwork and compliance to be fulfilled.
• There are no minimum capital investment requirements.
• The proprietor has full control and ownership stake.
• Proprietorship with less than Rs. 5 lakhs of income is not required to pay any income tax, as proprietorship is taxed as the individual owing the business.

CONS:

• Proprietor is personally liable to all financial risk, debt, losses and lawsuits.
• In proprietorship business sell of shares are not allowed, therefore it’s difficult to raise fund from the public.

Registration:

There is no requirement to register a sole proprietorship in India. But in order to receive payments in the name of the business, you need to open a current account in a bank.

Documents required:

• 1. Pan andAadhaarof proprietor.
• 2. Business address proof (e.g.: Rental agreement, Telephone bill/Electricity Bill/ Gas Bill/Bank Statement etc.)
• 3. Shop establishment license/ GST registration Certificate.

GOING OUT OF BUSINESS: A STEP EASY TO CLOSE:

The Proprietor and the proprietorship are one and the same for all legal purposes. Hence, there is no formality for winding up or closing a proprietorship. In most cases, to close a proprietorship, only the tax registrations obtained in the name of the proprietor must be cancelled.