A sole proprietorship is the simplest form of business structure that is owned, managed and controlled by the sole owner. The sole proprietorship is not a legal entity rather it just refers to a sole person who owns the business and is personally liable for its debts. This is one of the most popular forms of business structure for micro and small businesses operating in the unorganized sectors due to its simplicity ease information and nominal cost.
However, sole proprietorship is generally not suitable for the medium scaled and large scale businesses due to the array of disadvantages like unlimited liability, no separate legal entity, non-transferability and limited life of the business.
The government of India has not prescribed any mechanism for the registration of sole proprietorship firm. Thus, the registration of a proprietorship can only be recognized through tax registrations that the business is required to have as per the rules and regulations. These tax registrations may include GST Registration that must be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a sole proprietorship.
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