A Proprietorship Firm is a type of unregistered business entity that is owned, managed and controlled by one person called Proprietor. Proprietorship Firm is the most common type of business in India with minimal regulatory compliance requirements and is used by most micro and small businesses operating in the unorganized sectors.
This entity is ideal for entrepreneurs who are getting into business for the first time and for small businesses with few clients.
There is no mechanism provided by the Government to form the proprietorship firm. Proprietorship Firm may be started by just opening a bank account with the firm name and taking some Government Registration like Udyam Registration, GST Registration, Import Export Code etc. There is no requirement of a separate Income Tax PAN in the name of Proprietorship firm. The PAN of the proprietor will be the PAN of the firm and proprietor will have to file income tax return in his personal name.