1. Definition and Scope

• A sole proprietorship is a business structure owned and operated by one individual
  
• A self-employed individual is a person who works for themselves and earns income independently
  
• Sole proprietorship refers to the legal form of the business, while self-employment refers to the nature of work
  
• All sole proprietors are self-employed, but not all self-employed people operate sole proprietorships
  
• Self-employed status can include freelancers, gig workers, and independent contractors
  

2. Legal Recognition

• A sole proprietorship may involve business registrations, such as GST or Shop & Establishment license
  
• A self-employed individual may operate informally, without establishing a business identity
  
• Sole proprietorships can use a trade name or brand; self-employed individuals often use their personal name
  
• Legal documents for sole proprietorships are issued in the business name, while self-employed documents may reflect the individual
  
• Sole proprietorships may have more formal requirements based on their industry
  

3. Operations and Business Activity

• A sole proprietor can run a retail store, service center, or online business under a business identity
  
• A self-employed person typically provides personal services like writing, consulting, or design
  
• Sole proprietors may hire employees, lease property, and manage inventory
  
• Self-employed individuals usually work alone and deliver services directly to clients
  
• Business operations in a sole proprietorship are broader in scale and structure
  

4. Financial Identity and Bank Accounts

• Sole proprietors often maintain a current account in the business name
  
• Self-employed individuals may use their personal bank accounts for transactions
  
• Sole proprietors track expenses and revenues using business tools and systems
  
• Self-employed individuals may follow a simpler income and expense tracking system
  
• Banks and institutions may treat them differently in terms of lending and documentation
  

5. Regulatory and Reporting Differences

• A sole proprietorship may require specific licenses, registrations, and regular compliance
  
• A self-employed person may have minimal or no regulatory obligations, depending on their activity
  
• Sole proprietors may file taxes using detailed business forms like Schedule C
  
• Self-employed individuals may report earnings as personal income if the work is informal
  
• Regulatory oversight is typically higher for structured sole proprietorships