Sole proprietorship is the most convenient and easy way to business. In this method you are the sole owner of your business and you are entitled to 100% profit and losses. Sole proprietorship carries minimal paperwork and formalities. However, in order to run a business, there are certain requirements that needs to be fulfilled. Sole proprietorship is the most common form of business practiced in India and is not governed by any specific book of laws. Proprietor has the whole rights of the business to himself in terms of legal formalities, decision making, finance etc.
Some obligations which need to be fulfilled by Sole proprietorship
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Some compliance required for Sole Proprietorship
|Private Limited Company||One Person Company||Limited Liability Partnership||Partnership Firm||Proprietorship Firm|
|Act||Companies Act, 2013||Companies Act, 2013||Limited Liability Partnership Act, 2008||Indian Partnership Act,1932||No specified Act|
|Number of members||2 – 200||Only 1||2 – Unlimited||2 – 50||Only 1|
|Number of Director/Partner||2 – 15||Only 1||2 – Unlimited||2 – Unlimited||Only 1|
|Separate Legal Entity||Yes||Yes||Yes||No||No|
|Statutory Audit||Mandatory||Mandatory||Dependent||Not mandatory||Not mandatory|
|Ownership Transfer ability||Yes||No||Yes||No||No|
|Foreign Participation||Allowed||Not Allowed||Allowed||Not Allowed||Not Allowed|