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The business activity can be performed in several forms including sole proprietorship, partnership, private, public form and many more. For every firm there are set of legal rules and regulations as defined by the concern authority that need to follow by every form of corporate. Every company has its own features, attributes and advantages and disadvantages depend upon its business nature, requirements and corporate goals.
Choosing a legal structure depends on various parameters. They sometimes lead to one possible solution, but frequently their confrontation leads to different solutions, sometimes conflicting, which makes difficult the choice of one form of exploitation. Before examining the consequences of the implementation of a particular legal form, remember the difference between a sole proprietorship and a corporation.What is Sole Proprietorship
When a person exercises alone, in his own name, an economic activity, it says it exercises sole proprietorship. This person, called the entrepreneur, affects the activity of a number of its own heritage property. Individual operating then does not have a personality distinct from that of the operator.
We are talking about individual enterprise means business running in his or her own name, self-employed or freelance activity exercised. This activity carried on by the individual entrepreneur can be commercial, craft, professional or agricultural.
As of 2011, the legislature created a new category of sole proprietorship, the limited liability of EIRL through a very small formalism, the operator allocates a portion of its assets to professional activity, and thus allowing them protect property reserved for private assets.
The sole proprietorship is one of the simplest and most statutes selected when you run it as freelance. A sole proprietorship is still the easiest to create legal structure, and is a bonus very easy to manage. The status of auto-entrepreneur can also be interesting when you start as a freelance. But there is also other legal status when you're freelance, it is interesting to know. This status has many advantages, but one disadvantage: the individual entrepreneur has unlimited liability for the debts of the business.
Taxable on its income, one that creates a sole proprietorship therefore particularly interested in subscribing to a professional liability insurance to protect their assets in the event of a dispute arising from the exercise of its activity.
Another drawback is the activity of individual contractor is not entitled to unemployment benefits. So why do some choose this status?
For sole proprietorship it is not necessary to have registration but it needs to file an application for respective form of taxes like service tax, IEC, VAT, Shops & Establishments act and many more to create a legal individual business. Under sole proprietorship, one to register a business name or trademark or any of the business mark under which he or she can run his or her sole proprietorship business in India. Be sure the company name or any of the sole proprietorship industrial design should be unique in order to avoid any further complications.
It's all depends upon state or city where you want to open your sole proprietorship business in India as different states comprised different rules and regulations for the same. Most of the local government in India does not require their segment of sole proprietorship to get registration but some need to get sole proprietorship registration in India. Thus be sure to get follow each and every rules comes under the sole proprietorship.
Although registration for sole proprietorship is not mandatory but it is quite beneficial to have employer registration in India in order to avail the benefits of legal acts while finding the employees. It is also beneficial to have MSME Act registration to reap the complete benefits of the same. For opening a bank account for sole proprietorship in India it requires to have atleast 2 registrations of service tax or professional tax, MISME or Shops & Establishments tax in India. While dealing with banks; it is mandatory for the a sole proprietorship to comply with each and every aspect of KYC Know Your Customer under local, state or central government in India.Below are the Pros and cons of the Sole Proprietorship in India
Thus, if you are looking to establish your own business or company under sole proprietorship in order to reap the complete benefits of individual owner and grab the potential market while raising your business in legal wise then here we help you in complying with each and every aspect of how to establish a sole proprietorship in India in order to achieve your corporate goals.