Sole Proprietorship to Private Limited Company
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Sole Proprietorship to Private Limited Company
Incase You are planning to convert your Sole Proprietorship to Private Limited Company or even confused between choosing the right body corporate between a Sole Proprietorship and a Private Limited Company, we have listed below a basic comparison between the two.
| Parameters | Private limited company | Proprietorship |
|---|---|---|
| Registration | Registration mandatory with the MCA under the companies Act 2013. | No registration mandatory. |
| Business Name Approval | Business name must be approved by registrar of the company (ROC). | No approval needed. |
| Separate legal entity | Yes | No. Owner is the sole liable personal of the proprietorship |
| Liability | Directly proportional to it’s partners shares | Unlimited |
| Number of members- Min/Max | Minimum 2 members, Maximum 200 members | Minimum and maximum 1 member |
| Foreign ownership | Investment allowed under an automatic approval route | Not allowed at all |
| Transfer | By share transfer | Can not be transferred |
| Existence dependency | Independent of the members or directors | Owner dependent |
| Tax Applied | The total profit is taxable at 30% plus surcharges and cess | levied upon owner’s income tax |
| Legal Compliance | Filing Annual Accounts and Annual return every year with the ROC, Filing income tax return, has to conduct board and general meetings | It has to only file income tax return dependent upon the income of the owner. |
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