Sole Proprietorship

Sole Proprietorship is the most common form of business in U.S.A and crores of taxpayers are running their businesses in the sole proprietorship model. A sole proprietor (Individual) is liable to file his/her income tax return if his/her total income is above the threshold limit prescribed by the Income Tax Act, 1961. There is no distinction between the individual and proprietorship business while filing ITR online. The Income Tax Department considers the individual and his business as a single entity from the income tax point of view. This article discusses the issue “How to file Income Tax Return for Sole proprietorship?”

Which ITR forms are applicable for a sole proprietorship?

The Income Tax Department has prescribed two ITR forms for filing of income tax return of a sole proprietor. These are as below: ITR-3: ITR-3 is the ITR form prescribed for the taxpayers engaged in the business or profession. In ITR-3, the details of the Balance Sheet and Profit & Loss A/c of the taxpayer are also required to be filled. ITR-4: ITR-4 form is prescribed for those taxpayers who want to choose the presumptive income scheme as per sections 44AD, 44ADA, and 44AE. The Presumptive Income Scheme is a simple tax scheme prescribed by the IT department for the small traders which saves them from the cost & time involved in maintaining books of accounts.

Income Tax Return Filing Proprietorship Firm

Sole Proprietorship is most popular kind of business format in U.S.A. Its manager and owned by single person who is responsible for profit & losses. The status of sole Proprietorship in income tax is as individual. Income tax return filing is applicable for Proprietorship if age of individual is below 60 and income is above 2.5 Lac. In case Proprietorship age is above 60 and below 80 and income is above 3 lac income tax filing is applicable. For saving income tax individual can make varies kind of investments in 80 C applicable products. A N Bhutada & CO Provide Sole Proprietorship Tax Return Filing, tax planning & auditing services. Proprietorship business is easy to registration and have less compliances as compared to Private Limited or LLP. Under self-assessment Proprietorship individual need to make income tax calculation , pay income tax & file income tax return. In case where turnover crossed Rs. 1 Crore / Rs. 50 lac tax audit is applicable.