What is a Proprietorship Firm?

A proprietorship firm is the simplest form of business organization where a single individual owns and operates the business. The owner is solely responsible for all aspects of the business.

Is there a legal registration requirement for a proprietorship firm?

There is nothing called proprietorship registration, any statutory registration such as GST or Shops and Establishments or Professional tax registration will suffice. 

What are the advantages of a proprietorship firm?

Advantages include ease of formation, complete control by the owner, minimal compliance requirements, slab based taxation and direct decision-making.

What is the liability of the owner in a proprietorship firm?

The owner has unlimited liability, meaning they are personally responsible for all debts and obligations of the business. Personal assets can be used to settle business liabilities.

Can a proprietorship firm have employees?

Yes, a proprietorship can employ workers to assist in running the business. The owner is responsible for managing the employees and their obligations.

Can a proprietorship firm be converted into another business structure?

No, a proprietorship firm cannot be converted into other forms of business structures.

Is a proprietorship firm a separate legal entity?

In most jurisdictions, a proprietorship firm is not considered a separate legal entity from the owner. The business and personal assets of the owner are not distinct.

What are the disadvantages of a proprietorship firm?

Disadvantages include unlimited liability, limited access to capital, lack of continuity (as it is tied to the owner), and cannot seek investments.

Can a proprietorship firm raise funds through external sources?

It is not possible for a proprietorship firm to raise significant external funds 

Is a separate bank account required for a proprietorship firm?

It’s advisable to have a separate bank account for business transactions to maintain clarity.

What are the tax implications for a proprietorship firm?

Taxation depends on the Proprietor’s tax regime and is slab based

Is there a need to prepare formal financial statements for a proprietorship firm?

While not always mandatory until a certain revenue threshold, maintaining proper financial records is recommended for tracking business performance and ensuring compliance with tax regulations.