A sole proprietorship, also known as a sole trader, individual entrepreneurship or proprietorship is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity. It is the simplest legal form of a business entity.
A sole proprietorship does not create a separate legal entity from the owner. In other words, the identity of the owner or the sole proprietor coincides with the business entity. Because of this fact, the owner of the entity is fully liable for any and all the liabilities incurred by the business.
ADVANTAGES OF SOLE PROPRIETORSHIP FIRM:
£ Easy setup and low cost,
£ No corporate business taxes,
£ Simple & Affordable,
£ Operating Freedom & Flexibility,
£ Simplified Banking,
£ Simplified Tax Reporting.
LEGAL & ANNUAL COMPLIANCES FOR PROPRIETORSHIP:
£ Applying for PAN,
£ Deciding name of business,
£ Opening Bank Account in name of business,
£ MSME or Udyam/Udyog Aadhar Registration, not mandatory, but beneficial to be registered under the same,
£ GST Registration if turnover exceeds ₹ 20 Lakhs,
£ Shop & Establishment Registration of the Firm,
£ Filing of Income Tax Return annually,
£ GST Return if registered under GST,
£ Should deduct TDS & file TDS Return if liable for tax audit.