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entities in India

One of the most important decision before starting your business is to decide an appropriate structure of business viz. Private Limited Company, Limited Liability Partnership (LLP), One Person Company (OPC), Partnership Firm etc.

For your convenience, our research team will be happy to help you out deciding the appropriate form of business.

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From Startup Specialist

    Private Limited Company

    The Companies Act 2013 governs private limited company registration in India. A Private Limited Company is a closely held small business entity, which is one of the highly recommended business structures for start ups in India.
    Minimum 2 shareholders are required to start a private company. The higher limit of members are 200 as per the Companies Act, 2013. The liability of the shareholders are limited in case of any financial risk.
    At the time of Company registration, there must be a least 2 directors while maximum 15 directors can be appointed in a company. Proposed director must have attained the age of 18 years. A foreign national can also become a director of private limited company in India.
    There is no requirement of having a minimum paid-up share capital for incorporating a private limited company. Every private limited company must use "pvt.ltd." after their name.
    A private limited company does not have any relationship with the public and they aren't permitted to ask for any collateral from the public or public sectors. Shares of a private limited company are not transferable i.e. the shareholders are not entitled to transfer shares, which protect takeovers of private limited companies from big enterprises.

    Benefits of Company Registration

    Registering a company offers many benefits. A registered company increases the authenticity of your business. It helps your business:

    • Shield from personal liability and protects from other risks and losses.
    • Attract more customers.
    • Procure bank credits and good investment from reliable investors with ease.
    • Offers liability protection to protect your company’s assets.
    • Greater capital contribution and greater stability.
    • Increases the potential to grow big and expand.
    Checklist for Registering a Company in India

    As defined by the Companies Act 2013, we must guarantee that the checklist requirements are met.

    Two Directors:
    A private limited company must have at least two directors, with a maximum of fifteen. A minimum of one of the company's directors must be a resident of India.

    Unique Name:
    The name of your business must be unique. The suggested name should not match with any existing companies or trademarks in India.

    Minimum Capital Contribution:
    There is no minimum capital amount for a company. A company should have an authorized capital of at least ₹1 lakh.

    Registered Office:
    The registered office of a company does not have to be a commercial space. Even a rented home can be the registered office, so long as an NOC is obtained from the landlord.

    “Private limited company registration checklist”.

    • PAN Card of all the directors.
    • Passport size photographs of the same must be shown.
    • Either the “Aadhaar Card or the Voter identity card”, has to be presented during the process.
    • If the company property is on rent then the rent agreement is to be shown.
    • One of these two:- Electricity/ Water bill but any of them must be of the business place only.
    • Property papers (owned).
    • Landlord NOC (Format will be provided)

    Public Limited Company

    Public Limited Company Registration Services in Kolkata

    Incorporating a Public Limited Company provides you security and enjoys far more credibility than other business forms. This form of business also enjoys all the rights of a corporate entity with limited liabilities and it is an ideal choice for the small and medium scale enterprises who wish to raise the equity capital from the general public.

    It can be incorporated with a minimum number of three directors and has more stringent rules and regulations as compared to a Pvt. Ltd. Company.

    It must have a minimum number of seven members whereas there is no limit for the maximum number of members. It provides all the benefits of a private limited company along with more transparency and easy transferability of ownership and shareholding. Name, shares, formation, number of members, management and directors, etc differentiates any Public limited company from the private limited companies.

    Here are the benefits provided to the company with Public Limited company registration

    • Limited Liabilities for the Shareholders of the Company

      Shareholders of the public company enjoy the benefits of limited liabilities under which their assets are safe and cannot be used to clear the debts and losses of the company. Despite of it, the shareholders are responsible for their own legal offenses. All the members, directors and shareholders enjoy this right and their assets cannot be seized by any bank, creditors or government bodies.

    • Perpetual Succession

      A public limited company is considered as a corporate body that has perpetual succession. Means in case of death, retirement, insanity, and insolvency of one or more members/ shareholder/ directors, the company still continue its existence.

    • Improved Capital of the Company

      In a public limited company, the general public is invited to buy the shares of the company. Hence, anyone can invest in a public company that improves the capital of the proposed company.

    • Borrowing Capacity

      A public company can enjoy unlimited sources for borrowing funds. It can issue equity, debentures and can accept the deposits from the general public by selling its shares. Moreover, most of the financial institutions find public companies more prominent than other unregistered companies.

    • Fewer Risks

      Since public companies can sell their shares to the public, it lesser the scope of unsystematic risks of the market.

    • Better Opportunities for Growth and Expansion of the Company

      Fewer risks lead to better opportunities so that the company can grow and expand by investing in new projects from the funds raised by selling its shares in the market.

    An applicant has to collect all these documents to file along with the incorporation application:

    • Identity Proof such as Aadhar card, PAN card, Driving License, Voter Id of all the designated directors and shareholders. 
    • Address Proof of all the proposed directors and shareholder of the company.
    • PAN card details of all the directors and shareholders
    • Utility bill such as telephone, gas, water or electricity bill of the registered office as a residential proof of the business place. It should not be older than 2 months. 
    • An NOC or No Objection Certificate from the landlord of the business place. 
    • DSC or Digital Signature Certificate of the designated directors
    • Memorandum of Association (MOA) and Article of Association (AOA)

    One Person Company

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    From Startup Specialist

      With the introduction of the Companies Act, 2013 the concept of the One Person Company came into existence to motivate the small traders and entrepreneurs who has the potentiality to start their own business and build up their own identity. The biggest advantages of starting a One Person Company are that only one person is required to start the business. An entrepreneur can be the master of their own domain in case of One Person Company (OPC).

      Private Limited Company Registration Services in Kolkata

      Benefits for One Person Company Registration

      Limited Liability

      The directors’ personal property is forever safe in no matter the debts of the business. In OPC only investment in the company is lost, personal assets of the directors are saved.

      Continuous Existence

      An OPC has a separate legal identity, it would pass on to the nominee director, therefore, it has continued existence.

      Greater Credibility

      An OPC requires to have its books audited yearly, it has higher credibility between vendors and lending institutions.

      Easy to Sell OPC

      OPC Company is simple to sell because of limited documentation work.

      Full Control over the Company with a Single Owner

      This fact helps in fast decision making and execution. Yet OPC can select as many as 15 directors for official functions, without providing any share to them.

      Easy to raise funds and loans

      OPC is 1 of the easiest forms of corporate entities to operate. Very few ROC filing is to be registered with the Registrar of Companies. No need to handle Annual General Meeting and other regular compliances.

      Documents Required For OPC Registration
      • Copy of PAN Card of owner
      • Passport size photograph of the owner
      • Copy of Aadhaar Card/ Voter identity card
      • Copy of Rent agreement (If rented property)
      • Electricity/ Water bill (Business Place)
      • Copy of Property papers (If owned property)
      • Landlord NOC (Format will be provided)

      Nidhi Company

      A Nidhi Company is a company, which is a non- banking financial sector and it comes under the Companies Act, 2013. This company is formed with a motto to lend and borrow money within its members and it is very easy to form as a company. It requires at least 200 members in a year to get its Nidhi Company status. Their mode of operation is through its members only. Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA). They are also known as Benefit Fund, Permanent Fund etc.
      At least seven members are mandatory to form a Nidhi company. Out of these, three should be designated as the directors. However, it should acquire a minimum of 200 members within one year of commencement.
      Moreover, the company should have a minimum equity share capital of Rs 5 lakhs, for registering as a Nidhi Company. This entire amount has to be paid up. However, the Net Owned Funds (NOF) must be increased to Rs 10 lakhs within a year of registration.

      a. At least 10% of its outstanding deposits should comprise of un-encumbered term deposits.

      b. The prescribed NOF to deposits ratio should be 1:20.

      This includes equity share capital and free reserves and excludes accumulated losses as well as intangible assets.
      At least 10% of its outstanding deposits should comprise of un-encumbered term deposits.
      The prescribed NOF to deposits ratio should be 1:20. where 10% of the total deposits are in a fixed deposit account of a nationalized bank.

      There are many more advantages to forming a Nidhi Company. Some are listed below:
      • Liability is Limited: Liability of Directors and shareholders of the Nidhi Company is limited. In case the company suffers from any loss and faces, financial distress in the course of it’s business activity, the personal assets of any of the Directors or members are not at risk of being seized by banks, creditors, and government.
      • Less Regulations: “Nidhi” companies are governed under the Nidhi Rules, 2014. The Central Government is the regulating authority, which controls it’s activities and operations. Guidelines imposed by the RBI on “Nidhis” are very few.
      • Better Credibility: “Nidhi” companies enjoy better credibility as opposed to any other member-based organizations like Trusts, Cooperative Societies or NGOs.
      • Better Option for Savings : The main purpose of a Nidhi Company’s incorporation is to encourage the habit of saving among the members of the Company. This is how it achieves the other goal of it’s registration of being mutually beneficial. The Nidhi Companies are to “lend and borrow money” to and from it’s shareholders/members only.
      • Easy Access of Public Funds: The loans from the Nidhi Company come at a cheaper rate than loans from banks and other NBFCs, for it’s shareholders. And the process of obtaining the loan and customized services are much more convenient and quicker.
      • Ease of Fund: Nidhi Company is the safest and the cheapest way of inviting deposits from the general public. You just need to take them as registered members.
      • Micro Banking: Nidhis provide banking services to the remote and rural public of India which still is based in far-off locations and is, hence, devoid of accessing finance from national banks and NBFCs.
      • It acts as a “Better Credit Co-operative Society”: Nidhi Company is a close substitute for credit co-operative society. And, therefore, more preferred by the small financer. Once a Nidhi company has been registered, the members can avail of all the benefit’s of a credit co-operative society.
      • Simple Processing: Borrowing and lending to known persons, belonging to the same group, is much less complicated than dealing with banks, where the procedure is impersonal and fixed.
      • Easy Registration Process: The process to register a “Nidhi Company” with LegalRaasta is quite simple and transparent. You don’t need to take any license from RBI. You just have to incorporate your company as a public limited one with the MCA.
      • Single Regulatory Body: After the Amendment in Companies act 2013, Nidhi Companies are overseen by Nidhi Company Rules.
      • Low Capital Requirement: Ministry of Corporate Affairs (MCA) commands the minimum capital requirement of Rs.5 lakhs for the incorporation of a “Nidhi”. And, within 1-year, the capital has to be raised to at least Rs.10 lakhs. The Fees, DIN, DSC & Other Expenses are approx. Rs.25-30,000. These include Government fees that differ from State to State.
      • Fulfilling the needs of Lower & Middle-income groups: Nidhi Companies play an important role in meeting the needs of lower and middle-income groups by providing them financial help without complex formalities and documentation.
      • Easier Eligible: People getting minimum wages and belonging to lower strata are usually unable to take loans from traditional banks because of their high eligibility criteria. For them, Nidhi Company is a good option to obtain finance because of fewer conditions.
      • No External Involvement: Nidhi Companies take funds from their members and further provides loans to their members only. All transactions are done within this group only. So, no external factors are affecting the working of these companies. The investors/members themselves oversee the operations of the company.
      • Separate Entity: Nidhi Company is a separate legal entity that can acquire assets and incur debts in it’s own name.
      Nidhi Company Registration - Required Documents

      There are many documents mandatory to accomplish the Purpose of Nidhi Company Registration. The key Documents are given below, which are as follows:-

      • Copy of Directors Pan card
      • Identity proof of every shareholder and the director
      • Passport size photos of all the directors
      • Electricity bill or other utility bills for the address proof
      • Aadhaar Card of Directors as well as of Shareholders
      • Address proof of the directors and shareholders
      • Rent agreement copy (In case if rented)
      • No-Objection-Certificate (NOC) from the Landlord
      • Property papers copy

      Producer Company

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      The agricultural industry is the backbone of Indian economy. 60% of India’s population relies on agricultural activities for their livelihood. But these primary producers and farmers struggle a lot to get their share of profit. Keeping their miserable condition in mind, the Government of India has come up with an expert committee, headed by Y.K. Alagh to look into the matter. In 2002, the committee brought the concept of Producer companies in the Indian economy. Since then, they are working with the motive to uplift Indian farmers and agriculturalists (collectively termed “Producers”).
      Producer Company is formed under the Companies Act, 2013 and as per the act it can be formed by 10 individuals (or more) or 2 institutions or more or by a combination of both (10 individuals and 2 institutions).

      Producer Company is also recognized as the hybrid of a co-operative society and a registered entity. It excels on the unique elements of a cooperative structure having governing framework similar to that of a company. Such entity primarily refers to a registered corporate served by the group of individuals (mainly farmers) as its members.

      Deposit Acceptance
      The prevailing bylaw permits the Producer Company to accept a deposit in the form of a fixed deposit (aka FD) or a recurring deposit.

      Loan against security
      Farmer Producer companies are legally permitted to function as lending agencies. They are eligible to lend credit against the FD, gold, Govt securities.

      Profit allocation to the members
      The profit or income generated by the farmer producer company remains within the organization and is distributed among the serving members.

      No taxes on the agricultural income
      As such, no taxes are levied on the profit generated by the Producer Company. Presently, these entities are exempted from addressing any tax obligations imposed by the IT department.

      Loan Facility to Members
      Farmer Producer companies are legally eligible to disburse the credit to the founding members.

      Documents required for Producer Company Incorporation
      Following are the mandatory documentation for incorporating Farmer producer companies in India;

      • PAN & Photo
      • PAN & Photographs of the active directors & shareholders
      • ID Proof 
      • Aadhaar card, DL, passport, & voter ID of the Directors, members, and shareholders. 
      • Address Proof 
      • Bank Statement, utility bills such as landline bill, mobile bill, and electricity bill 
      • Producer Proof
      • Sarpanch letter/ /Khasra – Khatuni/ Income Tax Return (ITR)with Agriculture Income/ Any other proof a person as a serving member
      • Registered Address proof
      • Owner’s No objection certificate, utility bill, and Rent agreement

      Pre-incorporation legalities for incorporating Farmer Producer Company in India

      • At least ten producers: Producers who registered the company. At least 5 and a maximum of 15 directors 
      • Maximum 200 members: if the proposed entity willing to function as a private limited company 
      • Note: Inter-state co-operative society functioning as a producer farmer company may have more than 15 Directors for one year from the incorporation date as a producer company.

      Indian Subsidiary Company

      Many of the foreign investors are willing to start their business in India as our nation provides tonnes of opportunities because of its fast-growing market. Any foreign national apart from the citizen of Pakistan and Bangladesh or an entity formed and operating outside India can invest in the Indian market and holds the power to make their own subsidiary company in India by obtaining shares pertaining to the matters of FDI policy of India. Before getting into the process of Indian Subsidiary Company Registration make sure that as a business entity you have at least one Indian Director who must be residing in India and one Foreign Director which is must for forming Indian Subsidiary Company.

      A subsidiary company is also called sister company and the company which has control over it is called parent company or holding company. Parent company holds the right to control the subsidiary company either partially or completely.

      Companies Act 2013 controls the Indian Subsidiary Company Registration process. As per Companies Act 2013, a subsidiary company can be defined as a company in which a foreign corporate body or parent body has minimum 50% of the entire share capital. Parent company has a grip over a subsidiary company. It is necessary for a subsidiary company to abide by the laws of the nation in which they are planning to establish or are already established. Hence, if a subsidiary company is established in India then it is crucial for the company to follow the law in force in India.

      An important thing to keep in mind is that a subsidiary company of a foreign parent company is regarded as a separate legal entity and subsidiary company is obliged to work as per the norms of the country where it is situated. Business personnel can register an Indian subsidiary company as a private limited company or a public limited company.

      A private limited organization isn't available to the general population and appreciates the benefits over Public Company given by the Companies Act, 2013.

      A public limited company is where the public holds an enthusiasm for it and it is required to conform to various principles and guidelines as indicated by the Companies Act, 2013.

      Advantages of Indian Subsidiary registration
      • Brings Foreign Direct Investment:
        Indian government has approved 100% involvement of FDI in case of fast growing business industries; that is to say, FDI is permitted 100% without any foregoing approval. Although if you are a Partnership firm or LLP or Proprietorship then you may need a beforehand approval from government for FDI.
      • Limited Liability:
        Directors and members of the company have limited liability. They are stringently limited to their company’s share. Limited liability trait protects the Director or member of the company in the time of any loss or financial distress bore by the company. Personal assets of Directors and members will not be at risk due to the loss suffered by the company.

      • Perpetual Succession:
        Perpetual succession means no matter what happens to the members or directors of the company, the company will continue to exist. Insolvency, change in members, death, transfer etc will not have any effect on the existence of the company.
      • Scope Of Expansion:
        An Indian Subsidiary Company enjoys all the privileges of a Private Limited Company. The growth and expansion of business is easy because it raises capital from financial institutions, venture capitalist, and the investor.
      • Borrow Funds:
        A fully-owned subsidiary company in India has the benefit of borrowing funds from financial institutions in the form of loans.
      • Sue And Sued:
        Indian subsidiary company acts like a legal person; it can sue and can be sued.
      • Obtain Property In India:
        Foreign subsidiary company works on an independent structure which gives them the authority to buy properties in India.
      Documents Required for Indian Subsidiary Company Registration

      Indian National

      • PAN Card information
      • Address Proof
      • Identity Proof such as Aadhaar Card, Driving License, Voter Id

      Foreign National

      • Passport
      • Address Proof (Indian Consulate must certify the document)
      • Identity Proof (Indian Consulate must certify the document)

      Other Crucial Documents

      • Directors Identification Number (DIN)
      • Digital Signature Certificate (DSC)
      • Memorandum of Association (MOA) and Article of Association (AOA)
      • No Objection Certificate from the person who owns the property of business place
      • Certificate of Incorporation granted by the foreign government
      • Residential Proof
      Characteristics of Indian Subsidiary Companies
      • Beforehand approval is not required for the repatriation dividend
      • Indian subsidiary companies follow Indian transfer pricing framework
      • Union budget 2020 says that dividend distribution tax is nil

      Limited Liability Partnership

      Limited Liability Partnership is a type of partnership firm which is mostly preferred by entrepreneur. It is the easiest form of business structure with the benefit of limited liability. LLP registration gives freedom to partners to form a partnership structure where the liability of each partner is limited to the amount they contribute into the business. Limited liability partnership firm registration means that if the partnership fails, creditors cannot ask for partner’s personal property or income.
      In short, LLP is a separate legal entity from its member that has the power to extend all its assets keeping the liabilities of partners limited. Hence, a Limited Liability Partnership is a hybrid of a company and a partnership firm.

      Separate legal entity
      An LLP rejoices the independent legal status, just like companies. The LLP holds different status from its partners. Such entities have the right to sue the third party in case of legal dispute and vice versa.
      The contracts are signed in the LLP’s name, which aids to foster the trust of various stakeholders and renders the end-users and vendors a sense of confidence in the business.

      Limited liability of the partners
      The partners of such entities have limited liability. The partners’ liability is limited to the agreed contribution to the company. This indicates that they are accountable to pay only the quantum of contributions made by them and are not personally obligated to address any loss in the business. If an LLP ends up insolvent during winding up, only the LLP assets are liable for compensating its debts. The partners possess no personal liabilities, and therefore they can operate as credible businessmen.

      Low cost as well as minimal compliance
      The cost of incorporating an LLP is quite low compared to other business structures such as private and public limited companies. Also, the quantum of compliances is on the lower side for these entities. The LLP is mandated to file only two statements yearly basis, i.e. Statement of Accounts and Solvency and an Account return.

      No scope of minimum capital contribution
      The LLP can be incorporated in the absence of any minimum capital. Also, there is no requirement of procuring any amount of capital contributed by the concerned partners.

      Checklist of documents required for registering an LLP

      Here are the list of checklist and documents that are required during the registration of LLP in India-

      Minimum of two designated partners

      DPIN of all serving partners

      Name of the entity, which is not identical to any prevailing company or trademark

      The capital contribution made by the serving partners of the LLP

      LLP Agreement

      PAN Card/ Identification Proof of Proposed Partners: All proposed partners are mandated to furnish their PAN during registration time. PAN card serves as a fundamental ID proof.

      Partners’ Address Proof: Proposed partner furnish any one document out of passport, Voted ID, DL, or Aadhar Card. Name as well as other information as per address proof & PAN card ought to be exactly the same.

      Partners’ Residence Proof : Updated bank statement, utility bill, should be furnished as residence proof. Such bills should be the latest one, i.e. not older than 2-3 months & must entail the partner’s name as cited in PAN card.

      Photograph: Partners must furnish the latest passport size photo, preferably on white background.

      Passport (In Case Of Overseas Nationals/ NRIs) : To become a partner of Indian-based LLP, overseas nationals & NRIs have to furnish their passport mandatorily. Passport must be notarized by the concerned authorities in the nation of such foreign nationals and NRI, else Indian Embassy located in the nation can also sign the documents.

      Foreign nationals or NRIs must facilitate address proof, bank statement, and legit identity proof enclosing the address.

      Registered Office Address Proof: Registered office proof must be furnished during the registration process or within 30 days of incorporation.
      If the registered office is rented, a rent agreement and a NOC from the actual land owner have to be furnished. NOC shall be the landlord’s consent to permit the LLP to use the premises as a registered office’.
      Also, anyone document out of gas, electricity, or telephone bill should be submitted. The bill should not be older than two months and must reflect the address of the premise and the owner’s name.

      Digital Signature Certificate (DSC): One of the designated partners must hold DSC for signing the documents electronically.

      Partnership Firm

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      From Startup Specialist

        A partnership firm is a well-recognized business structure formed with mutual consent of all the partners for a profitable purpose. The firm is managed, owned and controlled by a set of people that are known as partners and have some shared capital in the firm. A partnership firm registration is done under the Partnership Act, 1932 with very less documentation and formalities.

        Partnership firms are distinguished as registered and non-registered firms. Partnership firm registration is not mandatory to register but it is advisable to do so. Partnership firm registration offers various benefits that do not apply to the non-registered ones.

        Advantages of registering a Partnership Firm

        Registering a Partnership firm in India offers the following benefits:

        Easy Operation
        Incorporating a partnership firm is relatively easy and seamless as compared to another form of business. The incorporation of a partnership firm begins with drafting a legal contract, known as a partnership deed. Keep in mind that the partnership deed is the only fundamental document required for incorporating a partnership firm.

        Attracts minimum Compliances
        As compared to the other business structures like LLP, a partnership firm has very minimal compliances. The absence of directors in a partnership firm mitigates the requirement of securing the DSC, i.e. Digital Signature Certificate or Director Identification Number. Reconstitution of the partnership firm via partnership deed is seemingly easier than other business structures. Also, these firms attract minimal operation-based compliances. The dissolution of such firms can be done without addressing heaps of compliances.

        Quick decision making
        The absence of a large management structure allows partnership firms to make swift decisions. Since the majority of the decision making is in the hand of the serving partners, there is no need of appointing additional officials to serve such a purpose. 

        Profits and Loss Ratio is at the partners’ discretion
        Partners have the absolute right to decide on the Profit and loss ratio as per mutually agreed terms and accordingly there is no disparity or vagueness among the serving partners, thereby ensuring the improved stability of the firms.
        In view of this, the individual partner is not required to address the entire loss. The presence of the associate partner can help them compensate for the loss on the agreed terms.

        Documents required for incorporating the Partnership firm in India

        The documents required to be furnished before the Registrar of Firms of the partnership firm includes;

        • Application form, i.e. Form 1, duly signed by the serving partners.
        • A true copy of Partnership Deed enclosing the seal and signature of the concerned authority.
        • Specimen of an affidavit authenticating all the information cited in the partnership deed & documents are legitimate.
        • Permanent Account Number, i.e. PAN & resident proof of the partners.
        • Proof the business place, i.e. lease agreement or rent agreement.

        Sole Proprietorship

        Sole Proprietorship Company Registration in Kolkata

        A sole proprietorship is a type of enterprise in which business is owned and managed by an individual. In a sole proprietorship business there is no legal difference between the owner and the business. To put it in another way a sole proprietorship is not a legal entity, where the organization is responsible for clearing off the debts of business. The sole proprietorship is a preferable and popular business form. It is simple and easy to form at nominal cost.

        A sole proprietorship is a convenient and simplified way to commence a business in India. It is neither considered as a corporation nor a company where the business is owned by a single person who is the owner/director/shareholder of the proposed entity.
        Some common examples of proprietorship business is shops such as chemist, saloons, grocery, etc.

        All business structures render various advantages. Some of the notable benefits offered by a Sole Proprietorship Business is as follows-

        Easy to Establish

        An applicant seeking to run their business affairs as a Sole Proprietor doesn’t need to undergo any registration process. They only need to secure business-specific licenses or registrations to run their business legally.

        Minimal Investment

        Since the Sole Proprietorship model is a boon for low-cost business ideas, it is often chosen by small businesses like retail shop outlets, grocery retailers, so on and so forth.
        Incorporation of business structure like a private limited company, OPC seeks significant expenditure in terms of capital procurement, which otherwise is nil in the case of the Sole Proprietorship model.

        No Profit Distribution

        The sole proprietors serve as the sole owner of their business and rejoice uncompromised control over their profit.

        Minimal Compliances

        The Sole Proprietorship business model doesn’t come under the ambit of any specific law; hence, it is free to operate without tedious compliances. Unlike entities functioning under Company Act, 2013, they are free to work without a Certificate of Incorporation or Registration Certificate. Also, they are not obligated to disclose annual reports with MCA. However, such businesses need to stay in line with applicable GST compliances. In view of this, they are also mandated to register under the prevailing GST Act.

        Lower Taxes

        Tax authority doesn’t treat Sole Proprietorship and Sole proprietor differently. Therefore, they do not need to address separate tax liabilities. Prevailing IT Act mandates sole proprietor to file an income tax return. It is a way to disclose profit and income generated before the tax authority for the given FY.
        Please remember that tax estimation is done as per the income tax slab rates as applicable to the taxpayer. Therefore, there is no requirement of filing a separate tax return for the Sole Proprietorship firm.

        Seamless Decision Making

        Sole Proprietorship business outweighs other business structures when it comes to the decision making. It offers complete authority to the owner to take any decision regarding business affairs without intervention of anyone else.
        No Auditing requirement for low income firm
        The financial accounts of Sole Proprietor business are not exposed to mandatory auditing requirements. It only comes into play when a business income surpasses the certain turnover threshold underpinned by the concerned authority.

        Documents required to operate as an Sole Proprietor-

        • PAN, photographs, &Aadhar Card of the proprietor
        • Utility bill of the business place such as water bill or electricity bill
        • Bank statement copy and other details such as account number and IFSC code
        • Applicants can avail of GST registration by submitting relevant e-application on the GST portal.


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