Does sole proprietor needs to show his personal assets in balance sheet

2697 views 5 replies

johny

own

46 Points Joined August 2013

Hello

I file ITR3. I trade intraday,Short term trading, F&O. I have FD investment income, House rental income.
I made F&O loss but i come under non audit case but books need to be maintained case.
we need to enter the balancesheet details in the ITR3 for business.

1.Do we need to mention this personal FD investment as deposits under Application of Funds---Current assets, loans and advances---Loans and advances---Deposits, loans and advances to corporates and others ?

2.Do we need to mention House worth (house rented to tenant) as fixed asset under Application of Funds---Fixed assets?

3.Do we need to mention advance amount that we received from tenant under Application of Funds---Current assets, loans and advances---Current liabilities and provisions-B.Liability for Leased Assets ? fyi, this advance will be returned to tenant once he vacates the building

4.And what should be the proprietors capital? Should it be my previous year's personal closing balance or the closing balance at my broker's account +funds i transferred to my broker account as proprietors capital?

5.In the books of accounts, do the FD investment ,rental income details need to be recorded

6.buy value and sell value details that need to be entered in the P&L statement goes above 2cr since trading was done in futures.
My account does not come under audit case but Is there any issue since it goes above 2 cr in this buy and sell value because these values are calculated with futures contracts price?

7.Since trading is a sole proprietorship business , cash in hand and cash at bank are same for personal as well as business. am i correct? If not do we need to maintain separate cash in hand for personal and business, similarly cash at bank?

8.Basically what I am trying to understand is that incase of partnership business, we have to have separate balance sheet for business and personal and we will be entering business balance sheet in the ITR3. But incase of sole proprietorship business like trading, should we need to maintain separate balance sheet for business and separate balance sheet for personal and enter only business balance sheet in ITR3?

9.Ultimately it comes to Does sole proprietor needs to show his personal assets in balance sheet of sole proprietorship business in ITR3?

Requesting experts please share your points on the above queries. I would really appreciate your help.

Thank you

Replies (5)

ayusmita

Tax consultant

5890 Points Joined September 2020

I don't understand few questions

1. if you're Account is not audited then no need to show your fd details just show the interest details
2. if you're Account is not audited then no need to show expect show the details in house property sechdule
3.no need if Account is not audited
4. proprietor capital is not the previous year capital
it is the sumtotal of assets of a firm or person owned by him or the owner
5 yes in books of account of your own
6. share trading transaction are different and it's calculation too even if it's cross 2 cr
7. you can maintain a three columns cash leader book
8 it will be fine if you maintain two balance sheet
9 if audit then yes

and if you want to show your balance sheet in itr
you can show it no problem

Rahul Perala

8 Points Joined January 2019

So you mean if the sole prop is subject to Audit he/she should show all his personal as well as business assets and liabilities in BS

Could you please confirm whether my understanding is correct ??

ayusmita

Tax consultant

5890 Points Joined September 2020

No sole proprietorship

And personal are two different parts

If you want. You maintain two balance sheet

You can not do in single one

Means when it's comes to personal you take everything in consideration

But when it comes to your business only means sole proprietorship business you take consideration of those personal things which directly or indirectly in used in your business purposes or you have invested nothing's else be taken apart from all the personal of yours....

Rahul Perala

8 Points Joined January 2019

Thank you so much for your quick reply

PARUL YADAV

finance expet

93 Points Joined May 2024

No, a sole proprietor typically does not need to show personal assets on the business balance sheet. The balance sheet should reflect only the business assets, liabilities, and equity. However, the owner's equity section may show the capital the owner has invested in the business. When applying for a personal loan with Kotak Mahindra Bank, the bank might require a declaration of personal assets to assess overall financial health, but these assets remain separate from the business's financial statements. It's crucial to maintain clear boundaries between personal and business finances to ensure accurate accounting and compliance.