What’s Sole Proprietor Firm?

What’s Sole Proprietor? It’s the sole business entity that is run by one individual. It is also known as trade, entrepreneurship, or proprietorship which is handed by a single individual. There is no distinction legally between a business and the person who holds its office.

In a sole proprietorship, an individual doesn’t need to work alone he/she can employ people for his business.

The sole proprietor has the responsibility for the losses and debts of the entity and that too unlimited responsibility. The sole proprietor can use a name different than that of its name for the business can get a trademark. Sole proprietorship examples are computer maintenance service providers, freelance content writers, graphic designers, fitness professionals and day-care owners, shops, and establishment owners.

What‘s Sole proprietor advantages and disadvantages

Now a day the most popular business form is a sole proprietorship. The business entity of such type involves the selection of the name for its business house which can be fictitious or assumed, but the name need not be duplicated or distinctive of another entity. Let’s go through some of the advantages and disadvantages associated with it.

Advantages of Sole Proprietorship:

• Simple and cheap to start with –

The way to start a sole proprietorship is simple and cheap, in comparison to a partnership firm or corporation. The documentation needed while starting the firm is low. The start-up cost is low because many government policies are encouraging youngers to start entrepreneurs and help the economy of the country to grow. Hope readers are finding the answer to what’s sole proprietor.

• Fewer government formalities –

The governmental rules and regulations that are specific to sole proprietors are fewer. A sole proprietor must have a record of his business dealing and other affairs. Government rules and regulations are not very complicated in the sole proprietorship business.

• Management control on one hand –

    Proprietors of the business house control all the related aspects of the business such as sales, production, finance, marketing, etc. It offers full management control of the business, therefore when this proprietorship business is growing, it’s the individual growth of the person. For taking control of all the business one must be good enough at various aspects of business dealing.

• Profits and losses belong to one person –

There is no legal distinction between the owner and the business entity. Therefore, all the profits and losses belong to one man only. People are learning what’s sole proprietor responsibility is to know his responsibilities in business dealing. The proprietor will be wholly and solely responsible for all the business and even legal matters cornering that, therefore it’s the proprietor who will be sued for legal matters.

Disadvantages of Sole Proprietorship:

• Sole proprietorship liability –

There is no distinction between the owner and the business setups, hence all the obligations that arise out of business dealing or from the business along to the owner of it.

If the owner fails to perform their duty which arises out of business, and he /she fails to give out of the business and its assets then it will be paid from the personnel assets of the person. Hence responsibilities here go to a personal level, as there is no distinction between the person and business entity in the eye of the law. This is all about what’s the sole proprietor in terms of unlimited legal liability in precise.

• Limited liability of the capital –

Whenever any person starts his/her business they put their financial assets and belonging into it. There are limits to resources and amounts of credit.

They must manage and raise financial capital by themselves. The proprietor cannot sell his share or say interest in the business to raise money.

To keep the business going you need to run finance because business is all capital-intensive affairs. If your business requirement of you is exceeding the resources then you will be landing in trouble soon.

• Succession of proprietorship –

The Indian laws say that a sole proprietorship business does not have a continue succession, people are often found asking this question what’s sole proprietorship and its inheritance so let’s learn it like, if the owner of the business dies or becomes incapable mentally to run it, the business will immediately come to an end.

Even if the owner does not want to operate the business it comes to an end. The family or employee can run the business for him in case of an unforeseeable event but that is of temporary nature.

This proprietorship has no legal entity separate from its owner, therefore, it cannot readily be passed from one owner to another. Apart from  the

Equipment and assets of the business are inherently attached to the sole proprietor of the business.

• What’s sole proprietor and his skills and expertise –

The proprietor of the business needs to be well-skilled and experienced, in business dealing and its related aspects.  Because any wrong decision can cost the business setting and can make it a worse situation for you.

He should be well versed in making investments in the business through its assets and profits, he must well learn in overcoming losses and turning them into profits.

Sole proprietorship registration process in India –

Sole proprietorship what you need to know about the process is here at your table. As we have mentioned earlier also that a sole proprietorship is a form of business, in which only one individual is required to start it.

The registration of the proprietorship is not a mandatory requirement that one has to fulfil. Any person who needs to start a business with less capital investment can smartly choose this option.

What’s sole proprietor documents requirements are given below do check –

• Permanent account number
• Name selection and trademark certificate
• Bank account details, all the transactions of business must be forming that account.
• Registered office address proof.

Now we must learn what’s sole proprietor need registration, although they’re not many mandatory requirements but is good if you have done it for yourself. These registrations are –

• SME registration –

You can do small and medium enterprises registration within the MSME act. The registration can be done by electronic means. There is no such compulsion of doing the registration under the SME act, but it can help you while applying for a loan for business purposes, because you can be available by this registration loan at a low rate of interest.

• Shop and establishment –

You can obtain the registration of the shops and establishment act under the local laws. It is issued on the base of business types and the number of employees within it.

 What’s sole proprietors of shops and establishments can do is, get himself /herself registered under the act of shop and establishment and after that, they will be given a license.

• GST registration –

If your turnover is more than 40 lakhs, you can get yourself registered under the GST.  If somebody is doing an online business he /she must get himself /herself a GST number. You can do your GST registration through the GST portal, will get your number within 3 or 4 days after applying.

Features of sole proprietorship –

There are quite interesting features of the sole proprietorship, which must know to the person who is thinking of opening a sole proprietorship business for himself or herself.

• Single Ownership of business –

What’s sole proprietor its firm or business in which one person who is a proprietor has unlimited rights and obligations to fulfill while running the business. A single person is behind the business enterprises working that’s why it is known as a sole proprietorship business.

• Personal organization with features of common identity –

One of the most significant features of the business is that there is no distinction between the organization and proprietor, both are taken as visas -viz in the eye of the law. Hence this is a personal organization because of the common identity of enterprises and individuals associated with it.

• Capital investment low-

The capital invested in the business is low, you don’t need any fixed amount of funds to start the sole proprietorship business.  The capital put in this is usually out of the personal recourses of what’s sole proprietor have. Another option he might have been raising money by borrowing from financial institutions or relatives.

• Control in one hand –

It’s a one-man handling show, here all the decision-making, planning, and execution are done by the proprietor of the business.  All the management of the business, employment, and resources are in one hand. But he /she can delegate their duties to the subordinate according to the requirement of the business.

• Credits and debts-

All the credits and debts of the business go into the one-person hand because he owes the whole responsibility of the business in every way.  The legal aspect of the business also belongs and goes to the personal level. What’s sole proprietor does in business dealing attaches to his responsibility.

• No legislation specially made-

The one of most interesting facts is that there is no special legislation by which the institution of the sole proper ship is governed.  In India, these businesses are run under the unorganized sector.

• Maintenance of secrecy –

As the business is only in one hand, therefore all the business-related secrecy is well maintained in the sole proprietorship.

• Organisation flexibility –

What’s sole proprietor best thing is that, whenever any changes needed to be made in the business, he does not require to consult anybody. The owner can make changes easily which offers flexibility in the organization.

Concluding Remark –

A sole proprietorship offers many benefits at the time, but it does have its kind of restrictions and limitations too. There are no such specific rules and regulations which govern them. One of the best things is that anybody without a huge financial amount can start it.

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