Proprietorship Compliance

Compliances to be followed by a Proprietorship  

A sole proprietorship is a type of business structure where one person owns and manages the company. In comparison to private or public limited businesses, sole proprietorships in India are subject to far less statutory requirements. 

While filing income tax returns to the income tax department and submitting an annual report to the Ministry of Corporate Affairs are the main forms of compliance for sole proprietorship firms, limited liability companies (LLPs) and corporations are also required to file both types of reports. Sole proprietorship enterprises must additionally abide by TDS, GST, ESI, and other regulations. 

Compliances for proprietorships

Therefore, the following are the primary compliances for proprietorships in India:

1. Returns for Sales Tax/VAT or Service Tax
2. Income Tax Returns Each Year

The following are the deadlines for filing these tax returns: 

Returns for Sales Tax (VAT): These must be submitted on the following designated dates, each quarter of the assessment financial year. 

1. For April 25 until June 25
2. July through September through October 25
3. January 25 for October through December
4. January through March through April 25

Returns for service taxes:  These are submitted on the following due dates of the assessment financial year, on a biannual basis:

1. April through September, with October 25
2. October through March through April 25

Income Tax Returns: Depending on whether a financial or tax audit is required, the following dates are used to file ITRs each year: 

1. When a statute does not require an audit: July 31 of the assessment fiscal year
2. The date on September 30 of the assessment financial year is when an audit is required by law. This is implemented when a proprietorship firm's yearly turnover exceeds INR One Crore or INR 25 Lac in the case of service revenue.

Compliance for the Yearly Sole Proprietorship

The annual compliance requirements for a sole proprietorship are as follows:

1. If you make more than Rs 20 lakh a year, you have to register for GST.
2. It is also possible to register a shop or establishment.
3. You have to file an annual income tax return if you are a sole proprietor.
4. For an owner running a proprietary business or profession, ITR Form-3 is pertinent.
5. People who have income from a business or profession and have chosen the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE of the Income Tax Act of 1961 and do not maintain a book of accounts in a sole proprietorship and have income from a business or profession are eligible to submit an ITR Form -4.

What is the bare minimum of capital required to open a proprietorship?

To establish a proprietorship, there is no requirement for funds. Therefore, you can use any amount of money to establish a proprietorship.

Can a sole proprietorship take investors or issue stock?

Proprietary businesses can issue shares and have investors since they are run and controlled by a single individual.

Do sole proprietorships require an audit of their financial records?

Ownership businesses don't always submit audited financial statements each year. But if the company brings in more than Rs. 1 crore in income annually, then a tax audit would be required. In the event that a sole proprietorship's yearly turnover surpasses Rs. 50 lakhs, the proprietor must have their accounts audited.

In what ways can Lawgical Adda assist you?

These compliances can be completed online, and you can submit your application on the Lawgical Adda official website. Our knowledgeable group of highly skilled CA/CS and seasoned lawyers will help you to comply with Sole Proprietorship legal filings. For individuals who are willing to start a company, business, or any other type of organization, we provide services that are budgeted.