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Eligibility
In India Proprietorships can be started in India by an Indian Citizen,. Since, there is no legal entity, the Proprietors PAN is used as the basis of all registrations and compliance
Registration Process
There is no such registraion process provided by the India Government for the registering a Proprietorship. Therefore, In India we can establish a Proprietorship through tax registrations and other business registrations such as Sales Tax or Service Tax or GST Registration.
The registrations can be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a sole proprietorship. Thus, all the registrations for a proprietorship would be in the name of the Proprietor, making the Proprietor personally liable for all the liabilities of the Proprietorship.
What is a Sole Proprietorship
A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole trader does not necessarily work ‘alone’ it is possible for the sole trader to employ other people.The sole trader receives all profits (subject to taxation specific to the business)
and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s. It is a “sole” proprietorship in contrast with partnerships (which have at least two owners).
A sole proprietor may use a trade name or business name other than their 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.
Advantages and Disadvantages
Registration of a business name for a sole proprietor is generally uncomplicated unless it involves the selection of a name that is fictitious, or “assumed”. The business owner is required to register with the appropriate local authorities such as Corporation/ Muncipality/ Panchayath, who will determine that the name submitted is not duplicated by another business entity. Furthermore, the business owner must complete a form submitted to the governing authority to acquire title as a “DBA” or “doing business as”. The authority in some US states is the Secretary of State.
The license for a sole proprietary business entitles the owner to hire employees and enlist the services of independent consultants. Although an employee or consultant may be requested by the owner to complete a specific project or participate in the company’s decision-making process, their contribution to the project or decision is considered a recommendation under the law. Under the legal doctrine Respondeat superior (Latin: “let the master answer”), the legal liability for any business decision arising from such a contribution remains upon the owner and cannot be renounced or apportioned.
This is transposed by the unlimited liability attached to a sole proprietary business. The owner carries the financial responsibility for all debts and/or losses suffered by the business, to the extent of using personal or other assets to discharge any outstanding liabilities. The owner is exclusively liable for all business activities conducted by the sole proprietorship and accordingly, entitled to full control and all earnings associated with it. The general aspect according to the general business law is that this type of business owner does not embody a “legal entity” Furthermore, any attempted and unreliable distinctions of the business do not change the classification under this title.
2nd Floor Wee Space Building
Near Sale Tax Office
Sales Tax Office Rd
Eranjipalam
Calicut 673006
+91 7012 544 326