Proprietorship is a simple form of business organization, where a single person owns, manages and controls all the business operations. It is also called Sole proprietorship, Sole trader or Individual entrepreneurship.
The individual who operates this business is called Proprietor .The Sole Proprietor or Sole trader is responsible for employing capital to commence business, bearing all the risk of the enterprise and managing all the activities single- handedly.
Proprietorship Firm is a firm where the ownership and management of the business are in control of one individual .Proprietorship Firms need not to fulfill legal formalities to start up the business. Sole Proprietorship firm has no separate legal entity from its owner.
Features of Proprietorship Firm
Proprietorship is a popular and oldest form of business because of its simplicity of Set up and its nominal cost. The features or basic characteristics of Proprietorship firm are as follows:-
One of the main characteristic of proprietorship firm is single ownership. In this type of business a single person owns the entire business which means all the assets and property belongs to the proprietor. According to this he bears all the risk associated with the enterprise.
No sharing of profit and loss
The income generated from the proprietorship firm is belongs to the sole proprietor only and he alone bears all the losses incurred by the firm. There is no sharing of profit and loss to any other person.
Lack of Legal Formalities
Proprietorship firms do not have a separate law to govern it and so there are not many special rules and regulations to follow. It does not require more legal formalities. The Formation of proprietorship firm is very simple and easy.
The Liabilities in proprietorship firm are unlimited. In the event of loss, the personal assets of the proprietor or trader along with the business assets can be utilized to discharge the dues of that business.
Advantages of Proprietorship Firm
Merits or advantages of forming Proprietorship Firm are as follows:-
· Easy formation and closure
· Better control
· Less Capital required
· Use of losses
· Flexibility in Operation
· Least record keeping
· Quick decision and prompt action
· Advantage of Tax
· Direct interaction with customers
· Provide employment opportunities
· Social benefits
· Easy in dissolution
Steps to start a Proprietorship Firm
Tax and Services always provides you better services. Here we provide you simple steps to start a proprietorship firm which are as follows:-
Ø Any business name if you do not want to choose your own name
Ø A business checking and saving account
Ø A website, portfolio or business page on social media marketing for yourself
Ø Some customers
Ø Register your business and
Ø Obtain the right license and permits