Today we at myonlineca discuss about the advantages of Sole Propreitorship Firm. A sole proprietorship is an uncomplicated Type of Business Structure that is owned and operated by the same person. It does not involve many of the convoluted filing requirements associated with other types of business structures such as Limited Liability Partnership, Private Limited Company, Partnership and One Person Company etc. Sole proprietorships grant a person to report business income and expenses on their respective tax returns.
Sole proprietorships are alluring to small investors because they are a relatively easy business to start. The owner is entitled to all the profit that the sole proprietorship collects. The sole proprietorships can be risky because there is no separation between the owner and the business.
In other words, the owner remains personally liable for any losses or debts that the sole proprietorship incurs. They can also be subjected to be legally answerable for any violations committed by the business or its employees.
Key Features of Sole Proprietorship Firm in India
Traditionally, proprietorship is the preferred way of setting up a small scale business for most of the businessmen. The main features of this business type clearly identify it from the other types.
The business is owned and operated by a single person.
Due to the engagement of a single person and minimum legal compliances, it is much simpler to start and dissolve the firm.
Tax-related and other legal compliances are tended to be minimum in case of a sole proprietorship.
A sole proprietorship structure can prove to be suitable for a service provider, a manufacturer as well as a trader or a merchant.
Advantages of Sole Proprietorship
The logic behind why entrepreneurs prefer sole proprietorship over other business structures is that the person is not accountable to any boss or supervisor since he or she is the owner of the company. In the Sole Proprietorship firm, the entrepreneur himself is the one who controls the business and decisions are made solely by him. There is no need to wait for a go-signal from other people to implement new rules and regulations. This entitlement can prove to be useful during emergencies and decisions are needed right away.
A sole proprietorship has a huge advantage when it comes to dealing with Business expenses, taxes, and compensation. Costs of opening and running a business with this structure is not very costly in terms of legal expenses, Business costs and any other significant business expenses.As the owner can easily take a decision regarding which expenses it needs to cut down and the sole proprietorship also enjoys tax benefits in India.
One of the perks of a sole proprietorship is that the owner can keep all the profits to himself unlike I partnership, LLP, Private Limited company or any other corporation where profits will be divided among themselves or with the shareholders.
Total Business Control
Business owners who are sole proprietors can make quick decisions as well as have complete control over the management of the business. This can be beneficial to the Business Owner since the owner does not have to discuss issues with business partners or any other individuals and can avoid disagreements and conflict of any sort in the Business Organisation. Also, if wrong decisions are made, the sole proprietor only has himself to blame.
Easy and Simple Process
Forming and registering sole proprietorship is a very effortless process In India which requires less formalities ,If the owner decides to change to the company or change it into a partnership firm, he or she can easily do it And if the owner decides to apply for business closure or stop operations, the process of doing it is very simpler as compared to any other business entity In India.
The Sole Proprietorship is the simplest form of business structure in India. If you are planning to run a startup, home business or any other small business In India, then the sole proprietorship business structure can prove to be the most suitable type of business entity. Therefore, I recommend you to register a sole proprietorship as a business entity if you wish to start a small or a startup In India.