A Sole Proprietorship is a type of unregistered business entity that is owned, managed and controlled by one person. Sole Proprietorship is the most common form of business in India, used by most micro and small businesses operating in the unorganised sectors. Proprietorships are very easy to start and have very minimal regulatory compliance requirement for starting and operating. So, its ideal for small businesses and first-time Entrepreneurs who would like to get a taste for business.

Who is a Proprietor?

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A Proprietor is a living person who is the owner of a Sole Proprietorship business. A Proprietor must be a living person and cannot be a corporate or legal entity. The Proprietor and Sole Proprietorship are one and the same under the eyes of the law. Hence, in a Proprietorship, the PAN and documents of the Proprietor are the basis for obtaining all other business registrations and licenses. In case of any issues or liability in the Sole Proprietorship business, the Sole Proprietor is held personally liable for the liability.

 

Advantages of Proprietorship

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The biggest advantage in starting a Proprietorship is the ease of setup. Since there are no registrations required to start a Proprietorship, the business owner can start taking payments from customers and issue invoices without having to worry about any registration.

The other advantage of a Proprietorship is that it requires no additional compliance in most cases. The PAN of the Proprietor and Proprietorship are one and the same. Hence, for a Sole Proprietorship with minimal business revenue - only income tax return in Form ITR-3 must be filed every year.