Sole proprietorship, as defined by the Govt. Of India, is a “one-man organisation where a single individual owns, manages and controls the business.” The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only register his or her name and secure necessary local licenses, and the sole proprietorship is ready for business.

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This is not a legal entity. It simply refers to a natural person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, which is simply a trade name. It does not create a legal entity separate from the sole proprietor owner.

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You get to keep whatever profit or income you generate. Furthermore, the tax benefits of sole proprietorship prevent double taxation of the firm. You will file returns and pay taxes only in your personal name. There are no separate income tax returns to be filed and no tax to be paid by the firm.

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There is no government registration needed in order to start a sole proprietorship business in India. However, you do need to open a current account with a bank in the name of the business. A current account in turn requires that you have a specified location from which you are doing business. The bank will ask you to submit at least two documents as proof of business location in the form of government registrations such as ID proof, address proof and other documents.