Proprietorship
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Proprietorship
It is the simplest form of business which is run by a single person.
It does not have a separate legal entity which means that the sole proprietor is solely responsible for all the debts of the business.
The major benefit of setting up a sole proprietorship is its simplicity and ease of setup. It has to comply with the least compliance as compared with that of a private or public limited company. It does not need to conduct meetings or observe voting for passing resolutions like other complex business forms.
Advantages of a Proprietorship business:
- Ease of formation
- Ease of operation
- Sole beneficiary of profits
- Less compliance and taxation benfits
- Privacy maintained
Limitation of a Proprietorship business:
- Unlimited liability
- Difficulty in raising funds
- Higher tax rate applicable
A proprietorship business need not take separate registration as a legal entity. It functions with the same PAN number as that of its Proprietor.
Steps for Registration of a Propreitorship business:
- Apply for Trade license in its own name
- Open a current bank account in the name of the business
Documents required for registration:
- Aadhaar Card of the Proprietor
- PAN Card of the Proprietor
- Proof of address of the business
Documents required to obtain a Trade License:
- Refer Reg-Trade License