Sole Proprietorship is the simplest form of business entity where one can have their business up and running within just 5 days with minimum compliances. A sole proprietorship, also known as the sole trader, individual entrepreneurship is a type of enterprise that is owned and run by one person and in which there is no distinction between the proprietor and the business entity legally. Proprietor is in direct control of all elements of business and is accountable for the profits or losses of business and which may include debts, loans, loss, etc.
It is a type of unregistered business entity that is owned, managed and controlled by one person. Sole proprietorship's are one of the most common forms of business in India, used by most micro and small businesses operating in the unorganized sectors. This type of entity is easy to start and carry minimal regulatory compliance requirement operating. However, after the startup phase, proprietorship's do not offer the promoter a host of benefits such as limited liability proprietorship, corporate status, separate legal entity, independent existence, transferability, perpetual existence - which are desirable features for any business. Thus, proprietorship Business is suited for unorganized, small businesses owners looking limited period of existence or less compliances.
Technically, it does not even need a registration but is recognized by other registrations such as GST, VAT etc. This is the most popular form of business in the unorganized sector, especially for micro and small businesses, but it is not devoid of certain demerits. Since its existence is validated by its proprietor or owner, it is also implied that it also does not enjoy the benefit of perpetual existence in the event of death or incapacity of the owner.
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