Sole Proprietor

Sole Proprietorship or Proprietorship is a business structure which is owned and operated by a single individual. It is an unincorporated business which is most commonly used to start a business in India, especially unorganised businesses.

Proprietorship is the simplest form of business structure to set-up and run, since it does not require any government registrations. Proprietorship is most suited for micro and small businesses such as newly started Trading businesses, professional services, etc.

Legally, the person owning business (i.e. Proprietor) and the business itself are considered one and the same. Accordingly, for income tax purpose also, any tax liability arising on account of Proprietorship business is to be discharged by the Proprietor as his own Personal tax. Similar is the case with all other taxes and legal liabilities.

An individual starting business or profession can receive revenue, receipts, etc in his saving bank account and there is no mandatory requirement to open a current account. But in cases where the Proprietorship business is operated under a ‘firm name’ (say ABC & Co) and customers / clients give cheques with Payee as ‘firm name’, banks will refuse to deposit the cheque in saving account since it is in the name of the Proprietor and not ‘firm name’. Therefore, it is recommended to open a current bank account.

However, to recognise or take note of existence of Proprietorship business, all banks insist on obtaining certain government registrations. For this, based on our experience over the years, we have noted that the banks are most receptive i.e. easily accept the following two registrations:

• GST Registration
• Udyog Aadhar (Now, Udyam Registration)

Tax Vyapar will help you in obtaining the above registrations as well as in opening a current bank account and other related formalities.