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. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. A sole trader does not necessarily work “alone”. It is possible for the sole trader to employ other people.
There is no mechanism provided by the Government of India for the registration of a Proprietorship. Therefore, the existence of a proprietor must be established through tax registrations and other business registrations that a business is required to have as per the rules and regulations. A sole proprietorship is dissolved when the owner stops doing business. This can occur if the owner sells the business, passes away and leaves the business to his heirs, or simply closes the business.
An owner is the owner of a sole proprietorship business. It is not a corporate or legal entity. The proprietor and proprietorship are the same legal entity. Proprietor’s PANs and other documents are the basis for all registrations and obtaining licenses. The proprietor is held personally liable in case of any liability in the business.