Faqs for sole propretership

Kumar (Founder) (63 Points)

05 July 2012

Hi Everyone,

I am an entrepreneur running a Sole Propretership Firm and I have tried a lot to find answers of some basic question which every proprietor will have.

I really appreciate your help in advance & hope that I will get the answers here and I am sure that your answers will help many other proprietor.

I have around 10 employees and turnover of around 10 Lacs a year. I am expecting that it will go double or triple by this year end and will hire 5-8 more employees. Most of our clients are from outside India and we are in software industry. I hope this will give you a good idea and will help to answer my questions.

Question are following:

# Do I need to do any kind of registration to run this IT Firm ?, as per my research thr is no need for any registration

# If registration is not required than can I issue appointment letter & salary slips to my employees?

# If registration is not required how my Firm's name is legal? or how can I make it legal? or I can use any name on my invoice without any legal registration?

# Is it necessary for solo proprietors to file service tax?

# Some employees does not have bank account, hence I need to give them cash and record it in our official letter head with my employee’s signature, is it valid for ITR? If not than what is the correct method for it?

# When I file my ITR (Income Tax Return), will I use my name or my firm name?

# How/Can I show my employee's salary as expense in my ITR?

# How I can create/manage accounts for my firm, do I need consult any CA for this?

# Do I need to audit my accounts from a CA & how much it will be going to cost?

# What are methods by which solo proprietor can save income tax?

# What is the threshold of solo proprietorship firm? when I need to switch from solo proprietorship firm to Pvt. Ltd. company? is it depends on number of employee or depends on turnover?