Proprietorship Firm Compliance & Taxation

Compliance is an important part of every business. No matter what type of entity you own, there is a need to comply with the legal requirements. A proprietorship firm also needs to abide by the essential Proprietorship Firm Compliance. The compliance requirement in the case of Proprietorship is the least also because it is not registered with the Ministry of Corporate Affairs (MCA) and other government departments. 

A Proprietorship firm does not require annual return filing with the MCA. It majorly requires you to file an income tax return (ITR) every year with the Income Tax Department. Also, please note that as a proprietor you would be required to file income tax returns only if your company has a taxable income which is over Rs. 2, 50,000 per year.

Sole proprietorship compliance requires you to file Income Tax Return every year. You have to file GST return if you have a GST number registered under the GST. As a solo proprietor, you can deduct TDS and choose to file TDS return if you are required to go for the Tax Audit.  You can also pay a 15% advance tax on the total annual income.  

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About A Proprietorship Company

A proprietorship is a firm type that can be started with a single member. The documentation and the registration process are swift, easy, and hassle-free. The start-up cost is low. Also, limited tax liability and ease of doing business are vital advantages for a new entrepreneur.  It is one of the most liked and preferred business types. 

Under Sections 80C, 80CCD, 80CCC, and 80D of the Income Tax Act, you can save tax. You can get tax exemption on your different investments made in the investment options like PPF Account, National Saving Certificate, Life Insurance Policy, Pension plans, Health Insurance, and more.   

Documents Annual Compliances For Proprietorship

The companies act, MCA, statutory laws, and other laws need a businessman to file annual compliances for a Proprietorship firm. For the same, you need to keep the necessary documents and returns ready. 

Below are the checklists essential for Annual Compliance: 
  • Invoices of Purchases and Sales during the year
  • Copy of GST returns & TDS Returns filed if any
  • Copy of TDS Challans Deposited 
  • Invoices of expenses incurred during the year
  • Credit card statements if expenses are incurred by the proprietor on behalf of a firm
  • Bank Statements from 1 April to 31 March for all bank accounts in the name of the firm
Proprietorship Annual Compliance Delhi
The Risks with a sole proprietorship

Along with gains, a sole proprietorship also has certain risks. The unlimited personal liability for the business debts is a big risk for a proprietor. It here means that in the condition when your business is not able to pay off its liabilities, your personal properties, bank accounts and other assets can be at risk. For a married proprietor, his/her spouse's interest may also be at risk. There may be other risks you should stay alert of.

Why not take the advantage of a proprietorship firm without worrying for proprietorship firm compliance in the country? Contact us right now to book our services at an affordable consulting fee in Delhi and other parts of the country.  

Frequently Asked Questions

No, a minor below18 year of age is not allowed to start a sole proprietorship in India.

For a proprietorship firm, you must be an Indian citizen staying in India.

There are no statutory fees and government charges for a Sole proprietorship firm registration in India.

Yes, a proprietor is allowed to take home a monthly salary. The total control of the business lies with the sole proprietorship.

Yes, a sole proprietor can have 8 employees. A sole proprietor is free to hire any number of employees.

There is no minimum limit for a proprietorship firm. You can commence your business with any amount of money you have.

A Proprietor is the single owner of the business and so has total control of profits along with loss.

Our commitment to delivering on-time services with hundred percent satisfaction makes Valcus a professional proprietorship compliance firm in India.