Software consulting sole proprietorship guidance needed

1]. You will be required to apply for the Permanent Account Number for the purpose of your Income-Tax matters.  Also you need to apply for obtaining your profession tax number for paying PT.  if you carrying on your profession from an rented premises then you will be required to take an No Objection Certificate from your Landlord to carry on the consulting business.

2].Yes you can put any name to your firm which you like, there’s no restriction. For Sole proprietary concerns no registration is required to be made anywhere.  However you can apply for the Shop Act Licensee under your respective state law.

3].  You need not pay Service Tax until your Gross Receipts exceeds Rs.10lacs in the previous year.  After it crosses the threshold you will be required to obtain the Service Tax Registration no & collect & start paying service tax.

4].  If your gross receipts cross the threshold of Rs. 15lacs in the previous year, then from the subsequent year you will be required to apply for Tax Deduction Account number & will be required to deduct TDS on any payments made as mentioned below.  You will also be subjected to Tax Audit u/s 44AB of the I-T act & will be required to get your books of accounts audited from a practising CA

 Professional fees, Rent, Commission paid, contractor payment etc…

An updated checklist for a software consultant exporting to a US client (this 2011 thread is still read):

• Registrations: PAN, current account in the trade name, Udyam (free, gives MSME benefits), Kerala Shops & Establishments registration, and Professional Tax (Kerala PT is due half-yearly). Hiring 10+ employees triggers ESI; 20+ triggers EPF.

• GST: register once turnover exceeds Rs 20 lakh. Exports are zero-rated, so file an LUT (RFD-11) every year and bill without IGST. Realise payment in foreign currency (FIRC/e-BRC) to qualify as export.

• Income-tax:

– Sec 44ADA (50% presumptive) if gross receipts are up to Rs 75 lakh with cash up to 5%. Software consulting is a notified profession, so 44AD is not available.

– Otherwise, keep books (Sec 44AA). Audit applies if receipts exceed Rs 75 lakh.

– Pay advance tax quarterly.

• Contract: get a written agreement with the US client covering IP ownership, payment terms and governing law. Give the US client Form W-8BEN so it does not withhold US tax.

• Name: any trade name is allowed for a proprietorship, but avoid registered trademarks.