A proprietorship business is owned and managed by an individual. He is the owner of the business and he gets all the profit from his business. All the risk in business also has to be borne by that person alone. A proprietorship business is very easy to start and it can be setup in a very short time and at a low cost.
In a proprietorship, A tax audit may be required when the business have annual turnover more than Rs.1 crore. In case of profession if the annual turnover of Rs 50 lakh or more than it becomes mandatory to audit it.
Documents required for Annual Compliances of Proprietorship
- Sale /purchase invoices
- Copy of TDS Return (if any)
- Copy of TDS challans
- Credit card statement if expenses are incurred by proprietor on behalf of proprietorship
- Invoices of expenses
- Bank statement of the financial year
- Copy of GST return filled (if any)
Annual Compliances for Proprietorship
- Income tax return: it is filled annually, in which full details of income of business are given. Under the income tax, tax is charged on the net profit of the business. When the audit of business is not mandatory then the last date 31st July of the return filling. If the audit of accounts is mandatory then the last date 30th September of the return filing.
- GST filing: The proprietorship registered under the GST (Goods and Services Tax) is mandatory to file its returns. All GST returns must be filled in time. Penalty has to be paid if returns are delayed. These returns are filed monthly, Quartly and yearly.
- TDS filing: Proprietors who have TAN they can deduct TDS of their employees. Its returns are filed quarterly. Returns must be filed by proprietorship and required to deduct tax at source as per TDS rules.
- ESI Return: If the proprietorship has more than 10 employees, then it is necessary to file a return of ESI. ESI return must be filed by proprietorship having ESI registration.
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