A sole proprietorship is a type of unregistered business entity that the owned, controlled and managed by the one person. Sole proprietorship’s are one of most common forms of the business in India, used by most micro business and small businesses operating in unorganised sectors. Proprietorships are very easy to the start and have been very minimal regulatory compliance requirement for the started and operating. However, after startup phase, proprietorship’s do not offer of the promoter host of the benefits such as the limited liability proprietorship LLP, corporate status,independent existence, separate legal entity, transferability, perpetual existence – which is desirable features for the any business. so, proprietorship registration is a suited only for the unorganised, small businesses that will be remain small and/or have a limited period of the existence.
There is no mechanism provided by Government of India for registration of the Proprietorship. Therefore, the existence of a proprietorship must be established through tax registrations and other business registrations that the business is a required to have a per rules and regulations. For instance, VAT or Good Service Tax or GST Registration can be obtained in name of Proprietor to the establish that Proprietor is a operating business as a sole proprietorship. Thus, all the registrations for the proprietorship would be in name of the Proprietor, making of the Proprietor personally liable for all liabilities of the Proprietorship.