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Proprietorship Firm

In India, most of the people have aspirations of owning and running their own business. They want to be employer and contribute to society by themselves. Thus, sole proprietorship; which is the simplest form of business under which one can operate a business.

The sole proprietorship is not a legal entity. It simply refers to a person who runs the business and is personally liable for its liabilities. The fictitious name is simply a trade name-which doesn’t distinguish the business from the sole proprietor owner.

The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. Its taxation is quite simple as compared to other forms of businesses as it is taxed in the name of sole proprietor only.

The single individual, who controls and owns the business, is the sole beneficiary of all profits or loss, and responsible for all risks. It is especially suitable for small business at least for its initial years of operation.


1. Control: As all the decision powers and responsibilities reside with the sole proprietor there is only one person with whom all the control lies. No outsider can interfere in the business activities of a sole proprietor. Thus he/she can take all the decision accordingly and thus enabling quick decision making. One enjoys this kind of freedom in only sole proprietorship.
2. No Separate Entity: According to the traditional saying, the owner and the business are considered as two separate entities. But the law does not make any distinction between the sole trader and its business. Hence, without the sole trader, the business has no identity of its own because he is the only person who performs all the business activities.
3. Ease of formation: It is formed by the owner himself. No legal conventions are obliged to start the sole proprietorship form of organization. Some licenses are needed which enhances the brand and for better operational functioning of the firm like
4. MSME Registration: It is not compulsory to get an MSME (Small and Medium Enterprise) registration, but it improves its credibility. The MSME registration can be done through an online registration process on MSME official website. We can help you in getting registered there.
5. Shop and Establishment Act License: Shop and Establishment Act License also known as Gumasthadhara, issued by the municipal organization of the particular region. It is not mandatory for all sole proprietorship firms but most of the firms have to obtain this license, as per the local laws of the region of the business.
6. Confidentiality of information: Being only the owner of the business, it allows him/her to keep all the business information confidential also maintaining secrecy.
7. Liability: In the sole proprietorship business, the sole owner has unlimited liability. The owner is himself liable to pay all the liabilities. If he takes a loan for its business then he will be liable for all the debts. Hence, he is personally liable for all the debt which can be recovered by his personal assets when funds are insufficient.
8. Sole Risk Bearer and Undivided Profits: A sole proprietor is only the one who bears all risks which are related to its business. All the profits or losses which are earned from the business are to be enjoyed by the sole owner.

These are some of the significant benefits of owning a sole proprietorship firm. It’s never too late to start a business of your own

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