Post Incorporation Compliances for Proprietorship Firm or After GST Registration

Post Incorporation Compliances for Proprietorship Firm or After GST Registration

Post Compliances for Proprietorship Firm/GST



Incorporation compliances are typically associated with the registration and ongoing requirements of companies, rather than proprietorship firms. Proprietorship firms are typically owned and managed by a single individual, and they do not have a separate legal entity distinct from the owner. However, there may still be certain compliances or obligations that need to be fulfilled depending on the nature of the business and applicable local laws and regulations. Here are some common post-incorporation compliances that a proprietorship firm may need to consider:


1. Immediately After Incorporation/Registration
  • Open Current Bank Account
  • Business Registrations: MSME - Shop Establishment
  • GST Registration: Registering for taxes is a crucial compliance requirement. You may need to obtain a Goods and Services Tax (GST) registration or other applicable tax registrations based on the nature of your business and turnover. Update Bank in GST within 180 days, Invoicing Template
  • Compliance with Local Laws: Be aware of any local laws, regulations, or municipal requirements that apply to your business activities. This may include zoning restrictions, health and safety regulations, environmental requirements, or specific rules for certain industries.
  • Accounting and Bookkeeping: Maintain proper accounting records for your business, including income, expenses, invoices, and receipts. It is important to keep track of your financial transactions to accurately assess your business performance and for taxation purposes. Proper Invoicing
  • Compliance with Labour Laws: If you have employees working for your proprietorship firm, you will need to comply with applicable labor laws, such as minimum wage requirements, working hour regulations, and employee benefits.
  • Intellectual Property Protection: Consider protecting your intellectual property assets, such as trademarks, copyrights, or patents, if applicable to your business. Consult with a legal professional to understand the registration and protection processes.
  • Filing Income Tax Returns: As a proprietorship firm, you will be required to file income tax returns under your personal income tax return. Ensure that you maintain proper records and file your income tax returns within the prescribed timelines.



2. TDS Return Filing
The TDS Return is to be filed where the proprietor has a valid TAN and the type of return to be filed depends upon the purpose of deduction. The types of TDS Return are:
Form 24Q – TDS on Salary
Form 27Q – TDS where deductee is a non-resident, foreign company
Form 26QB – TDS on payment for transfer of immovable property
Form 26Q – TDS in any other case.

3. GST Return filing
The proprietor needs to get his sole proprietorship registered for GST, if the aggregate business turnover exceeds Rs. 20 lacs. As per the GST Act, the GST Returns are to be filed if the taxpayer is registered under GST.

The returns to be filed for Sole Proprietorship firm registered under GST are GSTR-1 and GSTR-3B. These returns contain the details of outward and inward supplies of taxable goods and services, payment of taxes and are to be filed monthly or quarterly, as per the scheme availed by the proprietor.

4. EPF & ESI Return Filing
The proprietor is required to get EPF registration if it employs more than 20 persons and accordingly, filing of EPF Return becomes mandatory.

5. Accounting and Book-Keeping
The sole proprietor is required to maintain books of account, if the sale/turnover/gross receipts from the business is more than Rs. 25,00,000 or the income from business is more than Rs. 2,50,000 in any of the 3 preceding years.

6. Tax Audit
Sole proprietor is required to have a tax audit carried out if the sales, turnover or gross receipts of business exceed Rs. 1 crore in the financial year. However, he may be required to get their accounts audited in certain other circumstances.

Note:
The threshold limit of Rs. 1 crore for tax audit is proposed to be increased to Rs. 5 crore w.e.f., AY 2020-2021, if the proprietor’s cash receipts are limited to 5% of the gross receipts or turnover. The Finance Bill, 2021 has proposed to further increase this limit from ₹5 crore to ₹10 crore for taxpayers who are having digital transactions.


It is important to note that the compliance requirements can vary based on the jurisdiction in which you operate. Therefore, it is advisable to consult with a qualified legal or accounting professional who can provide guidance specific to your location and business activities.


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