What is the Difference Between Sole Proprietorship Vs Private Limited Company
In a sole proprietorship, the business is owned and managed by a single individual. This individual bears all responsibilities and enjoys all profits. A Private Limited Company is owned by shareholders and managed by directors. Ownership can be distributed among multiple shareholders.
Features
Ownership Structure
- Liability
- Registration Requirement
- Taxation
- Legal Entity
- Minimum Members
- Maximum Members
- Transfer of Ownership
- Compliance Requirements
- Audit Requirements
- Capital Requirement
- Continuity of Existence
- Name
Proprietorship
Owned and managed by a single individual.
- Proprietor bears unlimited personal liability.
- Not mandatory
- Taxed at individual's tax slab (0% to 30%)
- Not a separate legal entity
- One
- One
- Not easily transferable
- Minimal
- Not mandatory
- Usually low, funded by the proprietor's savings
- Ceases on proprietor's death or decision to close
- Typically operates under the proprietor's name
Private Limited
Owned by shareholders; managed by directors
- Limited liability
- Mandatory under the Companies Act 2013
- Taxed at the corporate tax rate (25% - 30% depending on turnover)
- A separate legal entity
- Two
- Up to 200 (excluding certain categories)
- Easily transferable
- Extensive
- Mandatory (based on turnover and capital)
- Higher, capital raised from shareholders
- Continues irrespective of changes in ownership
- Must register a unique name with ROC
