September 21, 2023

Businesses suitable for Sole Proprietorship

From street to corporates, you can see a business in every corner. A sole proprietorship is the most simple form of business with the flexibility to run. It is easy to form, direct control over operations, and fewer compliance requirements, and these are the reasons to choose this form compared to others. Based on its characteristics, this business form is suitable for many activities ranging from local transportation and retail business to consultancy services. This structure would be suitable for businesses in its starting stage and for those having fewer capital requirements, lower risk, and a small team of employees.

Here is the list of businesses which are most appropriate as proprietorship firm based on features of the organization:

  • Fewer Capital requirements
  • Lower Tax rates
  • Independent operations
  • Unorganized structure
  • Lower operational risk
  • Lower Compliance requirements

Retail Trading Activities

Retail activities such as selling groceries, household goods, merchandise, electric goods, etc. can be done on a very minimal risk by a proprietor. Beginning capital requirements are also less which completes the purpose of choosing proprietorship. Bakery and general stores also come under retail trading activities.

Small Scale Gruh Udhyog

Small-scale Gruh Udhyog operates with little capital requirements and with help of a small team of workers. It includes less risk that matches the features of a sole proprietorship to run. Food items like Khakhra, farsan, and also agarbatti, handicraft items, etc.also come under this category.

Catering Business

Catering business or food stalls do not require a corporate framework to be formed. The business can be easily managed with a few workers. The business needs direct control from one person and can be run in unorganized form; therefore proprietorship is correct to be formed for this.

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Software Consultancy

This kind of service requires basic system requirements and can be managedwith the medium capital flow. A person single-handed can even serve the business requirements here. Most freelancers provide services from home and work individually as proprietors.

Learning Assistance (Tutor)

Most of the time Tutoring services are provided by proprietors at home or at a suitable commercial place on rent. With help of few employees or on own, the services can be given as a proprietor keeping the whole amount of profit in the pocket.

Tax and Legal Consultancy

Chartered Accountants, Company Secretaries, and Lawyers often opt for proprietorship being in the service industry. The business requires very less capital and the professionals are directly responsible for their actions irrespective of the organization structure.

Clinic & Healthcare

The majority of the healthcare entities are initiated as a proprietorship firm in its initial stage. The proprietors want to gain stability in the business before taking it to an organized entity structure.

Local Transportation Services

Although the requirements of capital may be higher compared to other businesses mentioned here, the activities can be established with this structure and converted to another form once grown to a sustainable level. A person can work individually dealing with consumers on requirements. Apart from goods transportation, passenger transportation also comes under this category.

Above listed are the general categories of businesses that can work as an unorganized form and as proprietorship at the starting stage of business with an advantage of structural tax rates as individuals instead of corporate taxes. With increasing sustainable growth, the proprietorship business can be converted into another forms such as partnerships or limited companies. Capital funding, limited liability, and strategic alliance with experts are the reasons to convert the proprietorship to other forms.


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