A sole proprietorship is an industry that is owned, managed and controlled by one person. It is one of the most ordinary forms of industry in India, used by small industries operating in the unorganized areas. Proprietorships are very simple to start and have very minimum regulatory fulfillment requirement for getting started. However, later than the startup phase, proprietorship is do not offer the promoter a host of other profit such as limited responsibility, split legal entity, free survival, transferability, etc., which are attractive features for any industry. Therefore, proprietorship’s are suitable for unorganized, undersized businesses that will have a limited existence.
There is no method offered by the Government of India for the registration or incorporation of a Proprietorship. So, the existence of a proprietorship is established only by tax registrations and other industry registrations that a Proprietorship is necessary to have as per the policy and regulations.
Easy to Start
A Proprietorship business industry needs no registration. So, it is one of the easiest to begin with no formalities. However, after opening up the Proprietorship, it is comparatively harder to open a bank account or obtain a payment gateway in the name of the business – since more registrations might be necessary.
Since the name of a Proprietorship is not registered, a Proprietorship able to make a decision to have any name – as long as it does not infringe on a registered trademark. Though, since the name is not registered, any other person can also use the same trade name unless trademark registration is obtained.
A Proprietorship among less than Rs. 2 lakhs of profit is not needed to pay any income tax, as Proprietorships are taxed as the individual owing the business. However, once, income of the business exceeds Rs. 10 lakhs per annum, there are no major advantages for a Proprietorship in terms of taxation.