Advantages Of Proprietorship
- Easy registration: Sole proprietorship does not have any formal
incorporation or dissolution process - as its the same as the Proprietor. However, to operate a
business, the proprietor may have to obtain certain registrations and licenses to be compliant with the
laws and regulations of India.
- Lower compliance: As most proprietorship are only registered with
government departments like Income Tax & GST, the compliance burden will be lower. On the other hand,
entities like LLP or Company are registered with the Ministry of Corporate Affairs and have to file
various statutory returns and be audited by a Chartered Accountant each year.
- Simplicity: As there are no partners, shareholders, or directors, the
proprietor can easily operate this business with minimal documents and consent requirements. Hence, this
type of business structure is best suited for very small businesses.
- Business decision: In a proprietorship, the business owner takes all
business decisions. There is no consent or approval required from any other person. Hence, a proprietor
can normally take quick decisions regarding his business affairs.
- Complete control: sAs sole proprietorship is owned only by the
proprietor. He/she has complete control over the assets, revenue, expenses and all business operations.
Compliances For Proprietorship
- Income Tax Filing:The business owner of a proprietorship will have to
file personal income tax return using form ITR-3 or ITR-4.
- Business Income:Only income tax forms ITR-3 and ITR-4
allow for declaring business income. Hence, all proprietorships will have to file form ITR-3 or ITR-4 to
be compliant with the income tax regulations.
- GST Return Filing: If a proprietorship has GST
registration, GST return must be filed every month and quarter as per the scheme under which the
business is registered.
- TDS Returns: In case the proprietorship is having
employees or purchasing goods/services beyond a certain threshold - tax must be deducted at source and
TDS returns must be filed every quarter.
- An offender will be charged a fine of Rs. 25,000 for incorrect invoicing.
Document Required for Proprietorship