Advantages of forming a Sole proprietorship are:
- Very easy and simple to form as there is no legal requirement to be fulfilled
- No registration is required for a sole proprietorship, the PAN of the proprietor and business are same
- There is no additional cost to be incurred for formation
- The proprietor is in complete control of business decisions
- Profits are taxed at individual tax rates applicable to the proprietor i.e. the corporate tax rate is not levied.
Disadvantages of forming a Sole proprietorship are:
- The banks are not very willing to grant loans.
- The amount of capital required for setting up the business is limited to the personal funds of the owners and the amount that he can borrow.
- The owner of the business is personally liable for all the liabilities of the business.
Registration Process:
No registration is required for a sole proprietorship, the PAN of the proprietor and business is same. The owner has to obtain registration under other acts if the need arises.