Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

sole proprietorship

12 March 2017

Hello friends my father is a Contractor who does maintenance works in GAIL INDIA LTD and recently he expired.Whether it is possible to continue my father business which is a proprietorship concern and if it is yes then what are the procedures to be followed please provide me.

Reply
Follow
Share

3 Replies

Mahesh Babu (CA Final) (618 Points)
Replied 12 March 2017

Dear Simhachalam,

In the case of death of the Proprietor, the business can't continue under his name.

You can do one thing, submit a response to the IT Department to close deceased person's PAN no. and close allthe business in his name. Takeover all those business as a Legal heir and start the business in the name of you and give your PAN no. for the contract work done by you.

Upgrade to CAclubindia Pro. Subscribe Now!

simhachalam vangapandu (3 Points)
Replied 12 March 2017

We have registered for Service tax ,EPF,ESI authorities under my father name now what we have to do regarding that registration. Whether we have to follow all the procedures for registration as a proprietorship concern in my name?

Mahesh Babu (CA Final) (618 Points)
Replied 12 March 2017

Options After Death

The death of a sole proprietor does not mean operations immediately cease, however. If the sole proprietor authorized his personal representative to care for the business upon her death, the operations may continue. Additionally, the sole proprietor’s heirs could choose to continue the business, either as a new sole proprietorship or as some other business form.

Potential Concerns

Choosing to continue operations after the original sole proprietor dies is potentially problematic. Sole proprietors are personally liable for the debts and obligations of the business. Creditor claims against the business would typically need to be brought against the original sole proprietor’s estate, but choosing to continue operations could expose the successor entrepreneurs to liability for claims that arose when the original sole proprietor was alive.

Additional Considerations

While sole proprietorships are the least complicated form of business, they have some significant drawbacks in addition to determining what happens to the business when the sole proprietor dies. Sole proprietorships often have difficulty raising capital from outside sources and the interest in the business is not transferable. Before choosing to operate as a sole proprietorship, readers are strongly advised to seek legal counsel.

So, from the above information, it is concluded that there is a written agreement for continuity of business after the death of the proprietor by taking over and close all the registrations in the name of deceased person and Start fresh registrations with your name for diferrent tax departments till the implementation of GST.