Can a proprietorship business also be takeover or purchase?

24th Sep, 2025| 5 Min read.

Yes  — a proprietorship business can also be taken over or purchased, but the process is a little different compared to a company or LLP because:

Important Points about Proprietorship business Takeover:

1. No Separate Legal Entity
   A proprietorship and its owner are the same person in the eyes of law. So, you cannot buy the "proprietorship" itself, but you can buy its assets, goodwill, brand name, licenses, and customer base.
2. Assets & Liabilities Transfer
• Assets like land, machinery, stock, intellectual property, licenses, contracts, etc. can be transferred through proper agreements.
• Liabilities (loans, dues, creditors) do not automatically transfer — they need consent of lenders/creditors or a fresh agreement.
3. Goodwill & Brand
   If the business has a strong brand name or goodwill, that can also be purchased along with the business.
4. GST / Other Registrations
   Since registrations (like GST, MSME, Shops & Establishment) are in the name of the proprietor, the buyer has to take fresh registrations in their own name after takeover.
5. Agreement of Sale
   The transfer is usually done through an Asset Purchase Agreement / Business Transfer Agreement, where it is clearly mentioned what is being transferred — assets, stock, goodwill, customer list, contracts, etc.
6. Tax Aspects
• The seller (proprietor) pays capital gains tax (if applicable) on transfer of assets.
• The buyer records the purchase as assets + goodwill in their books.
• BizzXchange help in compliance of takeover of proprietorship business