Identity Proof and Address Proof for Sole Proprietorship
- Identity proof of Sole Proprietor includes Permanent Account Number (PAN) of the proprietor. Other identity proofs include Passport, Aadhar, and Driving license. Address Proof of Sole Proprietor includes Aadhar, Electricity bill, Water bill, and Bank statement.
Overview of a Sole Proprietorship
- A sole proprietorship offers liability protection for owners. A sole proprietor’s personal assets are at risk if the business is sued. An LLC’s profits and losses are "passed through" to the owners.
Requirements and Documentation for a Sole Proprietorship
To start a sole proprietorship, you must choose a business name and describe the business you intend to run. In order to start a sole proprietorship, you must register it.
Sole proprietorships are easy to establish and dismantle due to a lack of government involvement, making them popular with small business owners and contractors.
Pros and Cons of a Sole Proprietorship
The biggest disadvantage of a sole proprietorship is complete owner liability for any debts or obligations. If business debts become overwhelming, the owner’s finances suffer.
Sole proprietorships have a 13.3% tax rate. Sole proprietors should maximize deductions to reduce their tax burden and invest in the business.