Sole Proprietorship is the simplest and easiest business structure to start a new business. Sole Proprietorship is an unregistered business entity and simply refers to a person who owns the business and is personally responsible for its debt. Legally there is no difference between the Sole Proprietorship Firm and the Sole Proprietor. Certain relevant queries in connection with the same have been dealt below.
Only one person is required to form a Sole Proprietorship Firm.
A Sole Proprietorship Firm is very easy to form due to its minimal registration requirement and it requires only one person to incorporate.
In India there is no mechanism for registration of a Proprietorship Firm. However, the proprietorship firm can be established through various registrations required to start and/ or operate a business in India as per the rules and regulations, i.e., GST Registration, Trade License, Food License, Aadhar Udyog etc.
The proprietor can choose any business name as per his/her wish to create a Sole Proprietorship Firm. However, the business name should not be same as of a registered trade mark.
No, the Sole Proprietorship Firm cannot restrict any other person to use its business name, unless it gets its name registered under Trade Mark.
Income earned by Sole Proprietorship Firm is considered as income earned by the owner and thus, taxed in its individual hand. Accordingly, the tax shall be computed as per slab. However, it is to be noted that Income-tax Act, 1961 provides (almost) common rules for the calculation of taxable business income for all entity structure (say, company, partnership, sole proprietorship firm etc.)
The liability of a sole proprietor is unlimited. As the Government does not differentiate between the Sole Proprietorship firm and a Sole Proprietor, the proprietor is personally liable for all the debts incurred by the Sole Proprietorship Firm.
Legal Terminus can help you with registration of Sole Proprietorship Firm for you, as and when required, in a hassle-free manner within a reasonable time span and for competitive professional fee. To know more, please book a telephonic appointment with one of our consultants free of charge.
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