Sole proprietorship is very easy to start. This form of business is very easy as it is not governed by any strict or specific laws. There are minimal compliances here and are fulfilled easily. There is a single person known as sole proprietor who takes the decisions and carries the management of the business. To register a Proprietorship firm in India, there are no formalities. A business license should be obtained by the state/central government. Hence, if the name of the business is unique, then it is better to Register a Trademark.
No legal distinction or difference is being made between the owner and the business entity. The one person who owns and runs the proprietorship is called sole trader or proprietor. A sole proprietor can employ other people to work with him or her. It totally depends upon the sole trader whether he will work alone or whether he will employ people under his guidance. A sole proprietorship can be controlled by a limited liability partnership or any company as well. This does not have any separate existence from its owner. In simpler words, we can say it is a very simple rather simplest business under which one can operate and control the business.
Post Incorporation Compliances
The Proprietorship firms which are registered in India itself have to file income tax returns. The same process goes for the proprietor and the Proprietorship firm. So as they are considered a single person, the income tax filing will also remain the same.
According to the Income Tax Act, all the proprietors below 60 years old have to file the ITR by filling ITR respective forms. This is done only if the total amount or income exceeds Rs 2.5 lakhs. If any of the proprietors of the firm is above 60 years but less than 80 years, he also has to file a respective ITR if the Income exceeds above Rs 3 lakhs. And if the proprietors are above 80 years old, then the total income should exceed Rs 5 lakhs in order to file an ITR .
All these compliances remain same for big, medium and small size proprietorship firms across the country.
Audit for Proprietorship post compliances
Auditing is a very essential thing which is required for the proprietorship firm before and after depending upon the situation. Incase of post compliances, an auditing is done if the total sales are Rs 1 crore or more than that during the financial year. If in any case, the total gross receipts is more than Rs 50 lakhs, only during the financial year assessment, then an audit is necessary in a professional case.
Therefore, an audit is mandatory for any proprietorship firm which comes under presumptive taxation scheme. Even if there occurs a turnover in the scheme, the income which is claimed is lower than other deemed profits and gains under presumptive scheme.
A practicing and experienced Chartered Accountant is needed for audit purposes and to file income tax returns.
The income tax return of a Proprietorship firm which is in Form ITR Sugam can be filed online. The proprietor’s digital signature has to be used manually. Under Income Tax Act, 1961, the income tax has to be audited here and checked whether any international transactions have been conducted or not. The ITR forms have to be filled within 31st July of every year as that is considered to be the last date for every income tax return. The Proprietorship firms which have conducted international transactions have to file the income tax by filing the ITR forms by 30th November.
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
If you are interested in participating in the same, do let me know.
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