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Types of Businesses that are Best Suitable for Sole Proprietorship

  • Posted By SuperCA
  • On 11 July

Types of Businesses that are Best Suitable for Sole Proprietorship

Company Registration is extremely important for every business for its sustainability and securing its rights. It protects businesses from risks and losses and at the same time shields, the business from personal liability generates more capital contribution, attracts more customers, provides greater stability, and enhances the company's potential to grow big.

There are various forms of businesses available that one can register with. Companies can be registered as private limited, sole proprietorship, partnership, limited liability partnership, one-person company, etc and each has its own guidelines. Among all, online sole proprietorship registration is the most simple one with minimal formalities and compliance procedures. Sole proprietorship is the “One Man Business Entity” as all the investments in this type of business is done by the single proprietor who has the ultimate authority of the business as well as its management. Ultimately, He/She is the sole recipient of any profits/losses the business accrues.

In this article, we’ll talk about businesses for which online sole proprietorship registration is best suited. Online Sole Proprietorship registration is very simple, but before going for it, you need to take care of some basic things like deciding on a suitable business name and choosing a suitable location as the designated place for doing your business.

Features of a Sole Proprietorship Business

Type of businesses going for online sole proprietorship registration in India should have the following features-

➤ Minimal Capital requirements
➤ Fewer Tax rates
➤ Independent operations
➤ Unorganized structure
➤ Fewer operational risk
➤ Low Compliance requirements

Lists of businesses most suitable for Sole Proprietorship

Retail Traders

All businesses related to retail trading activities such as household goods, electric goods, grocery selling, general store, merchandise, bakery etc. can be done with a very negligible risk by the sole proprietor. Capital requirements for initial investment are also very much less which promotes the person in choosing this business.

Repair & Maintenance Services

The services comprising repair and maintenance of automobiles, household appliances, electronic machinery, etc. which are frequently provided at local shops, consumer places or garages can be the best suitable sole proprietorship business.

Small Scale home businesses

Small-scale home businesses require very little capital requirement and can be started with the help of a few members. It involves less risk that best matches with sole proprietorship business structure.

Local Transportation Services

The local transportation services like auto, e-rickshaw or mini buses require very less capital and just a few employees that can suit the interest of the sole proprietorship business type.

Software Consultancy services

These kinds of services require basic system requirements and can be handled with medium capital flow.

Tutoring services

Tutoring services are often provided by proprietors at home or at another suitable place. With the help of a few employees or on their own, the services can be provided as a proprietor enjoying the whole sum of profit.

Freelance Writers

Freelancers who operate independently require no capital and can operate from home also. Although starting a publishing company at the initial stage does not require an organized form of business with compliance requirements. Thus they can opt for online sole proprietorship registration.

Clinic & medical management facilities

Most clinics and healthcare entities in their starting stage start as sole proprietorship businesses.

Benefits that Online Sole Proprietorship Registration brings

Easy and inexpensive process

The establishment of a sole proprietorship is an easy and inexpensive process as less formalities are required & less wastage of time for taking various approvals. This type of business organization is the simplest one in terms of registration and compliances.

Because of minimal complexities, the sole proprietors can focus on enhancing their business rather than focusing on meeting various complex business compliances. Further, Sole Proprietor has no obligations or commitments to anyone and is free to operate their business.

Recognition as Supplier of Goods & Services

The Proprietor will be legally recognized as a Supplier of Goods & Services. He can also claim the Input tax credit (tax paid on the purchase of goods & services). This legal recognition will indirectly help in getting more consumer trust.

Lesser Taxation

Since there is no legal difference between a sole proprietorship business and a sole proprietor for the calculation of tax liability, there can be various ways through which income tax benefits can be availed.

The assets and liabilities of the Sole Proprietorship are the assets and liabilities of the Sole Proprietor. The Sole Proprietor is simply required to file his normal return and show the profits earned in the business in that return itself.

Job Creation

A sole proprietorship can also lead to many of the benefits associated with job creation. He/She can appoint workers but the sole ownership solely rests with him.

Sole decision taker

As only a single person is in command, it is easier to operate as the particular person will be the sole decision taker and he need not consider a plethora of opinions. Hence, there will be no conflict of ideas and decisions.

Secrecy of information

The financial reports of the business remain in private hands as the information is not made public unlike other companies, like Limited Liability Partnership, where financial statements and audit reports are made public for users through the MCA website.

No profit-sharing

A sole proprietor is a person who owns and manages the business on its own. So the profits earned will also be enjoyed by him alone.


Currently, Sole proprietorship is very much well-liked among small traders, merchants, freelancers, and other self-employed individuals. The reason for it being simplicity, of course. However, you should have clarity on your goals and objectives and also ensure it has come in line with the type of Sole proprietorship business structure.

Having said that, Sole Proprietorship can also hamper growth with time because it’s difficult to build a big business as a single person. So, if one is looking to expand the business then it is recommended that this structure should be converted to another form once achieving growth to a sustainable level.