A proprietorship is a type of business that is owned, managed, and controlled by one person. A Proprietor is the sole owner and decision-maker of the business. The proprietorship and proprietor are one and the same which makes the process of registration easy. Sole proprietorships are unincorporated businesses.
You would only be required to register with government departments like Income Tax & GST, which makes the compliance burden low and pocket friendly. On the other hand, entities like LLPs or Companies are registered with the Ministry of Corporate Affairs and have to file various statutory returns and be audited by a Chartered Accountant each year.
In Sole proprietorship, there are no partners, shareholders, or directors required and the proprietor can easily operate this business with minimal documents and sole ownership. You shall have complete control over the assets, revenue, expenses, and all business operations.
In a proprietorship, the business owner takes all business decisions. There is no consent or approval required from any other person.
Applying for PAN card, Aadhar card
the next step shall be to keep a name for the sole proprietorship business.
the third step shall be to open a bank account in the name of the business.
The proprietor needs to obtain the Registration Certificate under the Shops and Establishment Act of the state in which the business is located.
Register for GST and Small and Medium Enterprise (SME) under MSME Act, though it is not mandatory, it is beneficial to be registered under the same.
Features | Proprietorship | OPC | |||
Number of Person | One person | Two or more | Two or more | Two or more | One person and one nominee |
Designation | Proprietor | Partner | Designated Partner | Director | Director |
Name | As it is | As it is | Ends with LLP | Ends with Private Limited | Ends with OPC Private Limited |
Registration | Shops and Establishment | Registrar of Firms | Registrar of Companies | Registrar of Companies | Registrar of Companies |
Capital | No Minimum | No Minimum | No Minimum | No Minimum | No Minimum |
Legal Status | Not a Separate Entity | Not a Separate Entity | Separate Entity | Separate Entity | Separate Entity |
Liability | Unlimited | Unlimited | Limited | Limited | Limited |
Audit | If turnover above 1 crore | If turnover above 1 crore | If contribution above 25 lakhs or turnover above 40 lakhs | Compulsory | Compulsory |
Compliance | Least | More than proprietorship | More than partnership, less than company | Most | Less than Company |
Filing of resolution | No | No | No | Yes | Yes |
Taxability | Less | Less | 30%+surcharge +cess | 30%+surcharge +cess Distribution of profits taxed | Comparatively More |
Meetings | Not mandatory | Not mandatory | Not mandatory | Mandatory | Mandatory |
Credibility | Less | Less | More than Partnership less than company | High | High |
Dissolution | Easy | Easy | Less complex than company | Complex | Complex |
Governance | Not by any law as not a separate entity | Partnership Act, 1932 | LLP Act, 2008 | Companies Act, 2013 | Companies Act, 2013 |
Agency | No | Partners agent of each other | Partners not agent of each other | Members not agent of each other | Members not agent of each other |
Property | Belongs to the Proprietor | Belongs to its partners jointly | Separate from its partners | Separate from its members | Separate from its members |
Transfer of Share | Not possible | Not possible | Possible | Possible | Possible |
Number of Members | One | 2 to 20 | Min- 2 | Min- 2 | One |
Duration | Till death or insolvency or retirement of proprietor | Till death or insolvency or retirement of partner | Perpetual Succession | Perpetual Succession | Perpetual Succession |