Sole Proprietorship

When a business is owned by one person, it is a sole proprietorship firm. It is the simplest form under which a company can operate. This business does not have any separate identity under the law. It can also be operated under the name of its proprietor.

Proprietorships are simple to start and have minimal regulatory compliance requirements for operating. This entity is ideal for entrepreneurs who are getting into business for the first time and for small businesses with few clients.

Ease of setup

The entrepreneur can start operations and receive payments from clients as no registrations are required to start a proprietorship.

Ease of compliance

The other advantage of a Proprietorship is that it requires no additional compliance in most cases. The PAN of the proprietor and proprietorship are one and the same. Hence in most cases, only income tax return in Form ITR-3 must be filed every year.

Ease of dissolution

The proprietor does not have to particularly wind up the company incase he wants to cease operations. This saves a lot of time and effort.

Fundraising

A proprietorship cannot raise equity funds from angel investors, venture capital firms or PE funds. Banks also tend to restrictions on the amount of credit they can lend.