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 ?
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.
Registration of Proprietorship
There is no mechanism provided by the Government of India for the registration of a Proprietorship. There is also no State or Central Government Authority governing the registration or operations of Proprietorships in India. Therefore, the existence of a proprietorship can be established through one or more tax registrations and business license. For instance, MSME and GST Registration can be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a Sole Proprietorship.
As there is no procedure for registering the name of a Sole Proprietorship business, any other person can also use the same name for their business. However, in case a Proprietor wishes to protect the business name and the name is unique, a trademark registration can be obtained for the business name.