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Accounting of proprietary business

Rashi Bajaj (CA) (752 Points)

05 July 2015

Dear friends,

One of my friends has just started a proprietary business in the FY 2014-15. Before that he was a salaried person and maintained personal accounts.

I want to know that for the purpose of ITR4, should he maintain separate set of accounts and Balance sheet or should he consolidate both?

Plz note that there will be common bank accounts, joint accounts and personal investments as well.

Thanks in advance.

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3 Replies

NIKHIL GONSALVES (Student CA IPC / IPCC) (25 Points)
Replied 05 July 2015

hello, if he continues wth salary & business,file ITR 4 bez it will cover both the aspects & business deductions can be available+ deductions under 80c to 80u. & consoliated will do, but for transparency maintain different bank accounts

Nihar Ranjan Rout (CA Final & CS Final) (577 Points)
Replied 05 July 2015

would be better if you maintain different sets of books for both.

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 06 July 2015

prepare the separate balance sheet for both personal and business. and maintain separate maintian bank accounts to keep transparency. However you may console both balance sheet by showing as investment in business (it is net worth of business balance sheet) in Personal Balance sheet.