1. Eligibility Criteria

• Any resident individual in India can own a sole proprietorship.
  
• The person must be 18 years or older to legally enter into contracts.
  
• No educational qualifications or special skills are mandated by law.
  
• Foreign nationals or Non-Resident Indians (NRIs) cannot directly operate a sole proprietorship without prior government approval.
  
• It is best suited for small traders, service providers, and freelancers.

2. Legal Status of the Owner

• The owner and the business are considered the same legal entity.
  
• The sole proprietor bears complete legal responsibility for all business liabilities.
  
• Any income earned is directly taxed as personal income of the owner.
  
• The owner is personally liable for debts, losses, and legal obligations.
  
• No distinction exists between personal and business assets in law.

3. Ownership Rights and Responsibilities

• The owner has exclusive rights over profits, business decisions, and operations.
  
• All decisions are made without the need for consultation or approval from others.
  
• The proprietor is responsible for maintaining records, paying taxes, and obtaining licenses.
  
• There is no board of directors or partners to share responsibilities.
  
• The business ceases upon the death or incapacitation of the owner, unless transferred or restructured.

4. Documentation and Identity Requirements

• The individual must have valid identity proof (such as Aadhaar, PAN card).
  
• Address proof of the business location is usually required for registrations.
  
• The proprietor may need to apply for GST, MSME (Udyam), and local licenses based on the nature of the business.
  
• A separate current bank account in the business name is recommended.
  
• These documents help in establishing the owner as a legitimate business operator.

5. Limitations on Ownership

• Only one person can own and operate a sole proprietorship.
  
• It cannot be jointly owned or inherited as-is without structural changes.
  
• The business cannot issue shares or bring in investors as co-owners.
  
• There is no scope for succession planning without converting to another entity (like a private limited company).
  

Expansion is limited due to capital and liability constraints on the single owner.