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Salary drawing by sole proprietor in his business

RAJEEV (CA Articleship) (87 Points)

16 June 2016

Can a Sole proprietor draw salary from his sole proprietorship business?

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10 Replies

(Guest)

Proprietorship entity and the owner are treated as same person. So, no one can pay salary to himself. Even the income tax law does not allow deduction of such expense.

jagrati (j j) (117 Points)
Replied 16 June 2016

no sole proprietor can not draw salary from his own business.

RAJEEV (CA Articleship) (87 Points)
Replied 16 June 2016

Thank u

Regards,

Rajeev.

Ram Wani (Student CA Final) (84 Points)
Replied 17 June 2016

No, A sole proprietor cannot draw salary from his sole proprietor business. He has to be a partner of a partnership firm or a director of a company to draw salary.

1 Like

kunda (partner) (21 Points)
Replied 17 June 2016

If the business is HUF, can karta draw salary in individual status

AKASH KHETAN (PRACTICING CA) (37 Points)
Replied 17 June 2016

Status of person can be determined by PAN

Abhishek Kumar Gupta (Article) (146 Points)
Replied 17 June 2016

A proprietor can withdraw anything from his business but all that would only be treated as drawings either in cash or in kind.

(Guest)

Originally posted by : kunda
	If the business is HUF, can karta draw salary in individual status

Yes.

Ramesh (Student) (90 Points)
Replied 17 June 2016

Since sole proprietorship isn’t a separate business entity, it’s impossible to consider proprietor as an employee and take a deduction for wages or salaries. Hence, no drawing of salary. Even if allowed, tax treatment is same.ie, whether from PGBP or Salary.