Significant Features of Sole Proprietorship Firm
Posted by finacbooks on January 16th, 2020
Sole proprietorship, one of the most popular businesses is owned and run by a single person. There is no legal distinction between the owner and business entity. Sole proprietorship is also known as proprietorship or individual entrepreneurship where the sole trader is responsible for all the losses and debts. This is one of the most popular type of businesses that is specifically started by small traders and merchants. The process of registration is not mandatory for any sole proprietorship businesses.
What are the features of sole proprietorship firm?
Below are the significant features of sole proprietorship firm.
Immediate start of the business – An individual can start the business immediately at the will of the proprietor. No specific sole proprietor ship registration is required. But GST and MSME registrations are desirable.
Considerable tax benefit – The revenue of a proprietorship firm is comprised in the income of its proprietor itself. Therefore slab based income tax charges apply, which results in extensive tax benefits.
Very economical – There could be another reason for registering your sole proprietorship firm. This is quite inexpensive while comparing with OPC or private limited company. Sole proprietorship business is very economical because of its nominal compliance requirement. Here you don’t need to hire an auditor as well. With such type of advantages small merchants or traders can easily go for sole proprietorship.
Unlimited liability – Proprietor of a sole proprietorship firm is completely accountable for all the financial damages, debts etc. Creditors have the complete right to recover the levies from the personal assets of the proprietor incase business assets are not enough to pay the debts.
One person control - Here the sole trader is all-in-all. The person himself is a business decision maker. He/she employs persons to enhance the business. If wish a sole trader can share some responsibilities to his/her assistants but the ultimate authority will always be there under his/her control.
No special rule - Sole proprietorship business is not ruled by any special regulation. For other companies they’re governed by the companies Act like a partnership firm is ruled by partnership Act, a joint stock company is ruled by companies act etc. Though the person who is competent to run the sole proprietorship can surely start the business, but he/she will subject to the common law, the law of agreement and the law of insolvency.
FinacBooks a leading portal is having 10 years of experience in helping individuals for sole proprietorship registration and filing annual taxes at affordable price.Also See: Sole Proprietorship, Proprietorship Firm, Sole Trader, Significant Features, Sole, Proprietorship, Business
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