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A Sole Proprietorship, also known as Proprietorship, is a type of business owned and operated by a single individual where the owner is called the proprietor. The proprietor is the one and only owner of the business and is the recipient of all the profit and also personally liable for all debts, losses, and liabilities. In this kind of business, the owner and the business are one entity.
One of the most common types of small businesses in India is Sole Proprietorship. When starting on their own, businesses often choose Sole Proprietorship as their business structure. Micro and small businesses in India's unorganized sector prefer to register as Sole Proprietorships.
A sole proprietor is the owner of a Sole Proprietorship, and he is recognized as a legal entity in the same way that the business is. A Sole Proprietorship is a business entity where a single person owns, manages, and controls the business. So, Proprietorships cannot issue shares or have investors.
Because a Proprietorship is based on a single person, its survival is dependent on the ability of the proprietor to function. In the event of the owner's death, the Proprietorship firm closes.
Advantages of a Proprietorship
There are several advantages of forming a Proprietorship business. These are:
Easy to form: One of the primary advantages of a Proprietorship business is the ease with which the business can be formed. A Proprietorship business does not need to be registered. There are also no paper works involved
Less compliance and lower costs: Proprietorship enables businesses to operate with less compliance and lower costs. A Proprietorship can be established with any amount of starting capital. There are no fees to pay for starting the business and there is no government regulatory paperwork or compliance to fulfill.
Tax benefits: The tax advantages of Proprietorships prevent the firm from being taxed twice. There are no separate income tax returns to file, and there is no tax to pay by the firm. With an income of less than Rs. 2 lakhs, a Proprietorship is not required to pay income tax because Proprietorships are taxed as the individual who owns the business.
Sole authority: A Proprietorship is a business that is owned and operated by a single person. Because there are no partners to consult, the owner has complete authority and can make all decisions. In a Proprietorship, the proprietor gets to keep any profit or income that they generate as there are no partners involved in the business.
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