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Proprietorship

Overview
Registration requirements
Advantages
Disadvantages
Documents required
Conversion
Other queries

Disadvantages

  • No separation from the owner. The owner will be regarded as business and business will be regarded as the owner


  • Unlimited liability on the owner: In case there is a need for payment or any sort of liability, owner's property will be considered as business property. This disadvantage is not there if a limited company is incorporated.


  • Fundraising: Money cannot be raised from equity investors, angel investors. However, banks can lend money as a loan to the sole trader.


  • Transferability: A sole trader cannot sell his business. It means, assets can be sold, liabilities can be sold, but government registrations, bank accounts etc cannot be sold.


  • Perpetuity: Business will cease to exist if the owner is no more. However, the owner's legal heir can claim the business property with the help of personal laws exiting in India.

Overview

Proprietorship or sole proprietorship or sole trader is a type of business entity owned and operated by one person. If an individual gives the brand name for his business activities professionally.

companies like Coca-Cola, Apple, Hewlett-Packard's, Amazon, Google etc. all started their company as Sole Proprietorship and Flipkart, Snapdeal etc. started a business as sole proprietorship companies in India.

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