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In proprietorship's journey, with Mitra we start , Building a dream, with passion and heart. Building a dream, with passion and heart. Building a dream, with passion and heart.
What is Proprietorship ?
A proprietorship firm is the simplest form of business organization, where a single individual owns and operates the business. In this structure, there is no legal distinction between the business and its owner, meaning the individual is personally responsible for all aspects of the business, including profits, debts, and liabilities. The formation of a proprietorship firm is straightforward, typically requiring minimal registration and legal procedures. The business operates under the owner’s name or a “doing business as” (DBA) name and is taxed as part of the owner’s personal income tax return. One of the main advantages of a proprietorship is the full control the owner has over decision-making, with all profits being retained by the owner. However, the key disadvantage is unlimited liability, meaning the owner’s personal assets are at risk if the business faces financial issues or lawsuits. Proprietorships are often used by small businesses or service providers who need a simple, low-cost structure to get started. However, due to limited resources, access to capital, and growth potential, this structure may not be suitable for larger or high-risk businesses. Ultimately, a proprietorship firm is ideal for those looking for simplicity, flexibility, and direct control but may face challenges as the business expands or requires more capital and protection from liability.
🔑Key Features of Sole Proprietorship
Feature | Description |
---|---|
Ownership | One person owns the business. |
Legal Status | No separate legal entity; owner and business are the same. |
Control | The proprietor has full control over all decisions. |
Profit Sharing | The proprietor receives all profits. |
Liability | Unlimited liability – the owner is personally responsible for all business debts. |
Taxation | Business income is taxed as individual income under Income Tax Slabs. |
Compliance | Very few legal formalities and compliance requirements. |
Continuity | Business stops on the death, illness, or incapacity of the owner. No perpetual succession. |


Recommended Business Registrations:
Registration Name |
Purpose |
---|---|
GST Registration |
Mandatory if turnover exceeds ₹40 lakhs (goods) or ₹20 lakhs (services), or for inter-state supply. |
Udyam (MSME) Registration |
Enables benefits from government schemes like subsidies, loans, and tenders. |
Shop & Establishment Act |
Required by local municipal corporations for physical shop/office premises. |
FSSAI License |
Required for businesses involved in food production, processing, or distribution. |
Trade License |
Issued by local municipal bodies to legally conduct business. |