SOLE PROPRIETORSHIP
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A sole proprietorship is an unregistered business owned, managed, and operated by a single individual. It's the most common business structure in India, often used by small and micro enterprises operating informally. Starting a proprietorship is straightforward with minimal regulatory requirements. It's suitable for first-time entrepreneurs and small businesses with a limited customer base.
How one becomes a proprietor?
In a sole proprietorship business in India, the owner is the sole proprietor. It isn't considered a distinct legal entity but rather an extension of the owner themselves. The proprietor's PAN card is pivotal for obtaining various registrations like GST. If the business incurs liabilities or losses, the proprietor is personally liable and accountable for settling these using their own assets.
Advantages
Easy to setup: People can launch their business and accept payments from clients with basic registrations to establish a proprietorship.- Less compliance The proprietorship doesn't require particular record-keeping or compliance filings except for the proprietor's Income Tax return, as the proprietor's PAN and the proprietorship are identical.
Disadvantage
- Unlimited liability: In a sole proprietorship, the proprietor doesn't have limited liability protection, unlike in One Person Company/Private Limited Company/Limited Liability Partnership. The proprietor is personally liable for any losses or liabilities incurred by the proprietorship.
- 2. Transfer and conversion of entity: Registrations made under the proprietorship's name can't be transferred to another individual or company. Converting a proprietorship into any other entity is not feasible.
What are the types of proprietorship registration?
- MSME/SSI/UDYAM REGISTRATION.
- GST REGISTRATION.
- IMPORT AND EXPORT CODE (IEC).
- FSSAI REGISTRATION (FOOD INDUSTRY)