Sole Proprietorship
A Sole proprietorship can be explained as a kind of business or an organization that is owned, controlled and operated by a single individual who is the sole beneficiary of all profits or loss, and responsible for all risks. It is a popular kind of business, especially suitable for small business at least for its initial years of operation. This type of businesses is usually a specialized service such as hair salons, beauty parlors, or small retail shops, etc.
FEATURES
- This type of business organization is formed by the owner himself.
- No legal conventions are obliged to start the sole proprietorship form of organization.
- In some instances, the legal formalities are required or the owner should have a particular license or a certificate to run the business.
- The owner can close the business at his own discretion.
Liability
- In the sole proprietorship business, the sole owner has unlimited liability.
- In this case, the owner is himself liable to pay all the liabilities. If he takes a loan for its business then he will be liable for all the debts.
- Hence, he is personally liable for all the debt which can be recovered by his personal estate when funds are insufficient.
Advantages of a Sole Proprietorship
- Economical and less expensive: Can be started with even less capital
- Hassle-free registration process with less paperwork
- Less Compliance: One person can start a firm so minimum compliance work
- Ownership and control over business: As it is One-person company so privacy and confidentiality is maintained
- Decision making: Instant or Free decision making is possible as there is no involvement of any second or third partner or member
Documents Check List:
- Aadhar Card
- PAN (Permanent Account Number) card
- Latest Bank Statement
- Registered office proof