A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business structure that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (after tax) and has unlimited responsibility for all losses and debts. All assets and debts of the business in the proprietorship are owned by the proprietor. This means that the owner has no less liability than if they were acting as an individual instead of as a business.
A sole proprietor may use a trade name or business name other than his or her name. In India, there is no specific law for registration of sole proprietorship, but as per the Shop and Establishment Law (State Law), every establishment needs to get registered under the Act, which can be used as limited purpose sole proprietorship registration.
As the name reveals, a sole proprietorship is operated managed and run by a single individual. The identity of the organization is nothing but the individual himself. However, depending on the nature of business, it is required to obtain registration such as GST, Professional Tax etc. A sole proprietorship can be registered under the MSME Act to avail benefits and protection.
The proprietorship business carries unlimited business risk as the business proprietor is individually responsible to settle all business liabilities. The proprietor’s personal assets are at risk to compensate the business liabilities.
Proprietorship can obtain any of the following Registrations:
Sole proprietorship businesses need not be registered under any specific law in India. However, for opening an account with a bank, a person needs any two registrations under any law such as service tax or VAT, etc.
Since sole proprietorship is an individual business, all profits are taxed in the name of individual himself.
Proprietor manages the business as per his will and wish.
Since sole proprietorship is not created by law, no specific compliance or filing is required except for tax compliance and other legal compliance applicable for any business.
It is easy to close a sole proprietorship business. The proprietor can sell all businesses without much difficulty.
Copy of PAN
Copy of Aadhaar
Address Proof of Business
Rental Agreement in the name of Business
31-04-2018 at 10 AM
What is a Proprietorship?
Proprietorship is a business concern owned and operated by an individual. Proprietorship is nothing but the Individual carrying the business himself.
What is the status of Proprietorship?
Proprietorship is an unincorporated business. It does not have any separate status other than individual.
Can Proprietorship acquire a separate PAN?
Proprietorship can not obtain a separate PAN as there is no separate entity status to it. So, the PAN of Individual Proprietor will be used for Income tax purpose.
How to Register a Proprietorship?
In India, there is specific Registration for a Proprietorship.
Can Proprietorship open Current Account?
Yes. Proprietorship can open Current Account with a Bank with individual details of proprietor
Can one individual operate multiple Proprietorships?
Yes. One individual can operate multiple Proprietorships. There is no limit of number of Proprietorships by an Individual
Can Proprietorship be operated with a Brand Name or Business Name?
Yes. A Proprietorship can be operated with a Brand Name or Business Name. Also, the Current Account can be operated with a Business Name.
Can a Can Proprietorship obtain GST Registration?
Yes. A Proprietorship can obtain GST Registration with individual details of proprietor or with a Business Name.
What all registrations can be obtained for a Proprietorship?
Though there is no specific registration as such, the proprietorship needs to obtain ancillary registration related to business operations such as MSME Registration, Shops and Establishment Registration, Professional Tax Registration, Goods and Service Tax Registration etc.