1. Legal Identity

• The business and the owner are legally considered the same person
  
• There is no distinction between the individual and the business in the eyes of the law
  
• All legal rights and obligations are held by the owner personally
  
• The business does not have a corporate identity or a separate legal status
  
• It cannot enter into contracts or own property in a business name alone
  

2. Ownership and Control

• The sole proprietor personally owns all assets and liabilities of the business
  
• The owner signs contracts, leases, and agreements in their name
  
• Business decisions are made by the owner without any legal separation
  
• There is no board, shareholders, or partners to create a legal distance
  
• The business functions solely under the personal identity of the proprietor
  

3. Financial and Legal Liability

• The owner is personally liable for all debts and obligations of the business
  
• If the business fails, creditors can pursue the owner’s personal property
  
• There is no protective barrier as found in private limited companies or LLPs
  
• Court actions or legal disputes are addressed to the individual, not a separate business entity
  
• This exposes the owner to unlimited financial and legal risk
  

4. Legal Proceedings and Contracts

• The business cannot sue or be sued in its name
  
• All legal proceedings are conducted in the owner’s name
  
• Any legal responsibility or breach of contract falls directly on the individual
  
• Courts recognize the business as the owner itself
  
• This limits the business’s independence in formal legal matters
  

5. Impact on Business Identity

• Banks, suppliers, and clients often treat the business as an extension of the owner
  
• A sole proprietorship cannot register itself as a company or entity under the Companies Act
  
• All official documentation reflects the name and identity of the proprietor
  
• While business names can be used, they do not grant separate legal status
  
• The identity and credibility of the business depend entirely on the individual