SOLE PROPRIETORSHIP

A sole proprietorship, also known as a trader firm or proprietorship, is a business form that is owned and run by one individual. A sole proprietor may use a trade name or business name other than his or her name.A single person is completely responsible for the entire business with the business and the owner not being separate from each other.

The owner funds the business, takes any profits and bears any losses. Personal assets and business assets are not separated from each other. Its biggest advantage is quick formation and low compliances. However, the biggest disadvantage is unlimited liability. It doesn’t need its own Permanent Account Number (PAN) and the PAN of the owner (Proprietor) acts as the PAN for the Sole Proprietorship firm.

Registrations with various government departments are required only on a need basis. For example, if the business provides services and service tax is applicable, then registration with the service tax department is required. Same is true for other indirect taxes like VAT, Excise etc.