A proprietorship firm does not need to observe too many types of compliance. But, there are some types of proprietorship compliance which it needs to follow.
There are some mandatory registrations and returns for a proprietorship firm.
Moreover, there are some returns and registrations which need to be completed after crossing a specific threshold.
Types of Proprietorship Compliance
If you have a proprietorship business, you need some documents to start the business and need to file some annual returns to avoid becoming a tax defaulter.
1. PAN Card
Obtaining a PAN card is the first and foremost step towards starting a sole proprietorship business. It does not need to be in the name of the firm. Proprietor's personal PAN card will serve the purpose.
2. Income Tax Payment
There is no difference between a sole proprietorship and its owner. This is because a sole proprietorship has no separate legal entity. Therefore, the net profit of the business will be the income of the proprietor. If this income exceeds the taxable slab limit, which is Rs. 2,50,000 for individuals and HUFs, then there will be tax liability.
It is compulsory to pay income tax to avoid penalty and an income tax notice.
3. Income Tax Return
You need to file income tax returns if your income exceeds the taxable limit. However, you can still file a Nil Return of income if your income is less than the taxable limit. Filing a Nil return has the following benefits.
- Building credibility
- Serving as proof of income
- Claiming refund of TDS
4. GST Registration
If the turnover of business exceeds Rs. 20 Lakh, you need to obtain GST registration. You will receive a GST Identification Number (GSTIN). After receiving a GSTIN, you will be liable for collecting GST from customers and paying it to the government. You will also be liable to quote GSTIN on every invoice.
If you are an existing VAT/Service Tax/Central Excise assessee, you need to migrate to GST.
5. GST Returns
All registered businesses need to file a GST return. A GST return can only be filed online.
The type of return and the due date for filing varies with the type of business.
6. Tax Audit
Tax audit is not compulsory for a sole-proprietorship. You need it only if the turnover of your firm exceeds Rs. 2 Crore.
What documents do I need?
For seamless compliance, you need the following documents.
- Photographs of the proprietor
- Proof of address
- Date of birth proof (Class 10 certificate/Birth certificate)
- Bank account statement
- Purchase and sale invoice
- Expense invoice
- Balance sheet
- Profit and loss account
What is the Fee?
All-inclusive fee for proprietorship compliance starts from Rs. 15000
Why Choose PocketLawyer for Annual Compliance?
- Experienced and qualified professionals with 12 years of average experience.
- Access to highly qualified professionals anytime, anywhere in India.
- Tailor-made agreement to fit the exact needs of clients
- Fixed price. No hidden fees or long-term commitment.
- 100% satisfaction guaranteed. Our money back guarantee makes sure that you get complete satisfaction, every time you choose our services.
What is more?
- Our dedicated support team is always there to help you with any query or issue that you may have.
- Choosing PocketLawyer means the best service, at the best price.
Most importantly, we deliver what we promise. On time, every time.