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A sole proprietorship is an unincorporated enterprise that is owned and run by one natural person and in which there is no legal distinction between the owner and the business entity.
The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.
A sole proprietor may use a trade name or business name other than his, her, or its legal name. They may have to legally trademark their business name if it differs from their own legal name, the process varying depending upon country of residence.
The owner of a sole proprietorship typically signs contracts in his or her own name, because the sole proprietorship has no separate identity under the law. The sole proprietor owner will typically have customers write checks in the owner's name, even if the business uses a fictitious name. Sole proprietor owners can, and often do, mingle personal and business property and funds, something that partnerships, LLPs & Companies cannot do.
A) The advantages of a sole proprietorship include:
Because a sole proprietorship is indistinguishable from its owner, sole proprietorship taxation is quite simple. The income earned by a sole proprietorship is income earned by its owner.
B) The disadvantages of a sole proprietorship include:
C) Starting Sole Proprietorship
There is no government registration needed in order to start a sole proprietorship business in India. You don’t have to go to an online registration portal and fill up a form or submit any documents. However, you do need to open a current account with a bank in the name of the business.
A current account in turn requires that you have a specified location from which you are doing business. The bank will ask you to submit documents as proof of business location in the form of government registrations such as Shop & Establishment act license, Goods & Service Tax (GST) Certificate, CA Certificate etc.
D) Registration of Sole Proprietorship Business in India
You don’t need to register your sole proprietorship in India. But in order to receive payments in the name of the business, you need to open a current account in a bank. For this, you will need proof of existence of the firm, and the address proof. Documents needed include: