Advantages and Disadvantages of Sole Proprietorship

• Easy to set up
  An Indian citizen may start proprietorships in India. Since no legal entity exists, the PAN Proprietors is used as the criterion for all registrations and enforcement. Udyog Aadhaar registration and Trademark Registration can be done using the promoter's PAN and Aadhaar to establish and secure the company identity.
• Sole Gain Beneficiary
  No business other than that of a sole owner and a company of one person shall be entitled to the owner as the sole beneficiary of the profits. A minimum of at least two persons shall be involved in any other type of entity such as a partnership, LLP or company.
• Compliance and Taxation
  Since a company is not registered with any government authority, such as the Ministry of Corporate Affairs, the requirements for compliance are marginal. In addition, the owner would only have to file tax returns if the organization had more than INR 2.5 lakhs of taxable income annually. In the case of owners who have reached the age of 60 years or more during the preceding year, the filing of income tax will only be required if the taxable income is more than INR 3 lakhs. In the case of owners who have reached the age of 80 years or more during the preceding year, the filing of income tax would only be required if the taxable income is more than INR 5 lakhs.
• Why is sole proprietorship better than partnership?
  It's easier to operate: As a single person is at the head of the table of affairs, it is easier to act as the individual will be the sole decision-maker, and there is no need to consider a myriad of opinions. There is no concept of a council meeting or approval by other individuals in a business firm.

Proprietorship firm to Private Limited Company

Conversion of Proprietorship to Private Limited Company

• Advantage of Private Limited company over proprietorship
  The sole owner would have incurred limitless liabilities for any losses suffered, which means that he / she will be obligated to pay personally for any losses incurred by the firm. The regulation of a private limited company makes a clear distinction between the owner and the organization, thereby limiting its liabilities.
• Documents required
  All documents are listed below:

  • Identity and Address proof of the directors.
  • Letter of Authority/POA.
  • Proof of registered office address

Proprietorship firm to LLP

The conversion of a sole proprietorship into a limited liability partnership (LLP) is a good alternative for anyone looking to grow their small and medium-sized business. As it has only one man, it is not possible to convert a sole proprietorship directly into an LLP. It can be achieved either by closing the ownership and registering an LLP or by involving someone else in the business and making him a partner and then converting him to an LLP.