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Two businesses

RAJ KUMAR (FINANCE MANAGER) (1393 Points)

28 June 2011

HELLO FRIENDS, IF A PERSON DOES THE TWO BUSINESS IN PROPRIETORSHIP

ONE IS PROFESSIONAL AND OTHER IS BUSINESS IN ONE BASIS THEY ADOPT CASH BASIS OF ACCOUNTING AND IN ANOTHER THEY ADOPT MERCHANTILE BASIS OF ACCOUNTING.

I PREPARED THE CONSOLIDATED BALANCE SHEET FOR RETURN PURPOSE BUT IN RETURN WHICH METHOD IS TO BE SHOWN.

WHETHER MERCHANTILE BASIS OR CASH BASIS?

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12 Replies

valji (Accounts manager-MBA) (2150 Points)
Replied 28 June 2011

mercantile basis

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 28 June 2011

i think it is not allowed to do business as well as profession business..you can do either one or either of them you can do same other business....but wait for expert's comment...

RAJ KUMAR (FINANCE MANAGER) (1393 Points)
Replied 28 June 2011

HELLO FRIENDS, PLS. TELL ME CAN A PERSON RUNS THE COACHING INSTITUTE AND DO THE TRADING BUSINESS BOTH TOGETHER?

Aparna Raja K.C (Student) (520 Points)
Replied 28 June 2011

It is always advicible to go for mercantile basis. any way, if the proportion of income from cash basis is more then , give it as cash basis :)

havnt heard of any such rule which restrain a person from running a coaching institute and trading simultaneously :)

kumar (student) (138 Points)
Replied 28 June 2011

Actually while filing the business income return the return need be filed on the name of the business concern. for eg.. Xyz traders proprietor and the method followed for this needs to be disclosed. IT is not correc to prepare the consolidated balancesheet it the person having two differents viz professional (income, assets) and business (income, assets) for tax purposes. As a conclusion 2 different returns need to be filed and consolidated B/s. of 2 different (professionl, Business) cannot be consolidated, because accounting standads-21,23,27 are applicable only for companies

RAJ KUMAR (FINANCE MANAGER) (1393 Points)
Replied 29 June 2011

BUT HOW CAN I FILE TWO RETURNS OF THE PROPRIETOR.

PLS. HELP ME.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 29 June 2011

you have to follow merchantile basis for both the business.

RAJ KUMAR (FINANCE MANAGER) (1393 Points)
Replied 29 June 2011

BUT IN IELTS INSTITUTE HOW CAN I RECOGNIWE THE FEES ON MERCHANTILE BASIS.

Vikas (CA) (1135 Points)
Replied 29 June 2011

Dear,

1.You will have to prepare the consolidated Balance Sheet...so you are correct...

2.In the return, mentioning the method of accounting is optional if you don't have the Tax Audit u/s.44AB.

3.Still, Method of accouting for being on a safer shall be mentioned as Mercantile.

Note : Try adopting one method, preferably mercantile to avoid future problems...

RAJ KUMAR (FINANCE MANAGER) (1393 Points)
Replied 01 July 2011

PLS. ANY MORE REPLIES THAT IN IELTS INSTITUTE HOW CAN I ADOPT MERCHANTILE METHOD.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 02 July 2011

gross receipts are your business income, and we presume that there is no due as on end of year as almost every bill is paid, but you might have some advances, for which you would be liable to provide the service at later year, recognize that advance fees and put that in advances.

C.A SHASHANK GOYAL (Chartered Accountant) (362 Points)
Replied 02 July 2011

In my opinion , since one return is one which is to filed for both bussiness and profession and also as per the provision of section 145 any method of accounting either cash or mercantile but should be consistenly followed from one year to anotther . so you can chose any of the method but it is advisable to follow mercantile .And also for both bussines as well as profession only one method is to be followed as one return is filed , however if bussiness carried is other person within the section 2(31) then you might be allowed to follow different methods as in that case two different return will be filed .