In Present Day Scenario, the Indian government is paying a lot of attention to young entrepreneurs. The reason for this is that there is a lot of potential among the youth to have the indomitable courage and the decision to take the risk. To make such a young entrepreneur, the Indian government is encouraging youth to start Startup company.
The new business started as a company, partnership or a temporary organization whose purpose is to search for an innovative product, service, process or a platform and scalable business model is called startup company or startup. The startup is a new company, which some youth starts to work with themselves or two to three people. Generally, the person who started it also manages the company with the capital investing in it. This company launches the products or services that are not available in the market.
What are the rules for opening or starting a startup company
For any company to enter the startup category, it must be registered as a Private Limited Company (Pvt Ltd), Partnership firm or Limited Liability Partnership (LLP) firm or any other Business Entity. Apart from these statements, the formation of a company for a startup should not be 5 years old. The annual turnover of the company should be Rs. 25 crores. Only then can the company join the startup category or Be Recognized as a Startup.
Now I have told you about what is Startup company and what are the rules surrounding it. Now if you want to start a Startup company and you find the process of incorporating a company as a Business entity such as Private Limited Company, Partnership firm registration or Limited Liability Partnership firm etc, you can choose to register your company as a Sole Proprietorship firm. Below I will tell you Why Proprietorship Firm Registration is the best for Startups.
But First I will tell you about Sole Proprietorship
What Is Sole Proprietorship?
This is the easiest and simple type of business. In India, many industries or businesses are being run, which does not have a license holder. With the help of Sole Proprietorship, the person’s business gets registered under the name of him, with the help of which man can add his business profit, expenditure etc. on his tax return. This actually proves to be very beneficial for traders who start their business with very little capital. All the benefits under it go to the proprietor’s rights. If there is any loss to the company, then all the damage proprietor carries. That’s because there is no difference between owner and business under the Sole Proprietorship. This implies that the owner has to bear the burden of debt or loss in the trade under the Sole Proprietorship. At the same time, the responsibility of any kind of involvement under his business will be his own.
Why Proprietorship is the best for Startups
With this option, any man gets ready to run his business, given the benefit of this. Its special benefits are given below.
This is very easy and cheap since establishing a Formal Corporation.One can work from everywhere and anywhere. There is no need for a proper office. You can register at your Residential Address.In many states, it has been granted a double taxation discount, which is always applicable to any Formal Corporation. For this, directly a name of the owner or a fictitious name can be kept as business-friendly.
For this, the proprietor does not have to file or create a file of any business tax report separately. Instead, the proprietor can give all his business information on his personal tax return. Thus, using proprietorship, one can avoid spending money on tax filling and its accounting. The most important thing is that it is income tax on the owner’s income and not the corporate tax rate.
Under this, the owner can employ any number and anyone for work, the owner’s spouse and Family may also be involved in the company’s work. Although the entire responsibility will be on one person, a married couple can start their business with the help of a proprietorship.
All decisions in this business are taken by only one man. So there is no need to depend on anyone for any kind of decision. The owner can run his business according to his mind as desired.
For Sole Proprietorship you don’t need to perform many Legal formalities, you can and may not get firm registered In India.The Sole Proprietorship can easily be converted into any Business entity in India.