"Being your boss" is not just the phrase these days and rather most preferred by young entrepreneurs and start-ups. Many people are starting their own business now a day, especially in the form of sole-proprietorship. This structure is preferred because of its following features:
- Easy to incorporate
- Minimum compliance
- Can be started a solo
Every year enormous amounts are invested in the economy to start-up the different ventures. However, several handfuls of mistakes these new entrepreneurs make due to lack of proper guidance and sufficient knowledge. The proprietor needs to be cautious all the time (from start to end) as the small mistake can turn massive investment, and all the efforts go waste.
Few are the general mistakes made by the sole owner in his proprietorship:
- Not having a clear vision or mission
- Mix up the assets and need of business with personal needs
- Skipping or avoiding taxes
- Not maintaining proper records or books of accounts for expenses
- Continuous reducing income with no proper reporting for the same
- Choosing the wrong structure of doing own business
- Inadequate analysis of fund requirement
- No protection of intellectual property such as avoiding to register Trademark of business Logo
Registration of this business is not necessary; however, to receive the payment in the name of a business, one shall open a current account for which registration certificate is needed. Sole-proprietor can be registered in any form in India, such as:
- Shop & establishment act
- GST registration certificate
- MSME registration certificate
- Import-Export Code certificate
- FSSAI registration
Advantages of sole proprietorship registration as follows:
- To begin the sole-proprietorship is very easy. Unlike other structure, this business can be started with less paper-work and time involvement
- Cost-wise also, sole-proprietorship is the most affordable business as the cost involved in starting a business is very less, and compliance costs are also minimal.
- A sole proprietor can claim the loss and profit of his business in his own ITR.
- The owner has direct control over his business, and he has full discretion over the decisions for his business. He also gets to enjoy full benefits and the profit of the business
- Sole-proprietor being the boss of his own, can hire employees for growth and development of his business.
Apart from various benefits of sole-proprietorship, there remain several disadvantages too, such as:
- This structure of business has no separate legal entity which means an current operating account in the name of the business is a hectic process comparatively to companies or LLP
- Liability of sole owner is not limited; thus proprietor is responsible for all the debt and loss incurred in the business
- Business is non-transferable since the registration is PAN based and license of sole-proprietorship is not transferable to other persons.
- This structure is not allowed to raise equity from angel investors, venture capital, and private equity fund
- Sole-proprietorship ends with the proprietor; thus if the sole owner dies or becomes insolvent, proprietorship gets dissolved.
Our team of experts would assist you as well as advise you on the type of legal structure that best suits your requirement. The average processing time to complete Sole proprietorship registration Online is 3-5 days vary as per the government of concerned state and client's documentation. Our team of experts provides a wide variety of services such as registration, advisory, compliances, etc. of various legal structures other than sole-proprietorship such as Private Company, Public Company, OPC, Partnership, Section 8 Companies, and Producer Company.
