SOLE PROPRIETORSHIP PROCEDURE AND ADVANTAGE

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Sole proprietorship is business organization which is handled by a single person, basically this is the only business nature which don’t requires much investment and also not any registration, all the things has to be managed by the single hand who is the owner of the premises. As the owner will be single person then all the profits and losses will be of the single person. Even the owner can appoint any other person for the purpose of management but legally the ownership will be of the proprietorship.

What is the advantage of Sole proprietorship?

Control on the business: –

As the ownership will be of the one person, the secrecy of the business will be maintained and the entire control of the business depend on the single person so as the result of that the process of decision making will be less and also the dependency will be less.

Less compliance need to be done:-

The sole proprietorship is the form of business which can be run by the single person and easily can be started and that is why there are so many less compliances to be done for the pursuance of the business.

Less costly:-

As the sole proprietor no need much compliance so it is very cheap to be incorporated as compare to LLP or company.

What is the disadvantage of Sole proprietorship?

Unlimited Liability:-

There are the unlimited liabilities on a sole proprietor as the entire workload is on a single person then he is the only one who liable for their all expenses or liability which is entered into his books.

There is no perpetual succession: –

If in future something will be happens with the sole proprietor then the business will be vanished or it can be shut down at the any time so this scenario is unreliable and never can get the public trust.

  • Here is the necessary document which is necessary to have for being a sole proprietor.
  • Aadhaar card
  • PAN card
  • Registered office proof
  • Bank account

Here are the checklists required for sole proprietor

  • PAN card of the proprietor
  • Name and address of the business
  • Registration under GST if the turnover of the business is greater than the amount of 20lakhs. 
  • Bank account on the name of premises.
  • Registration of the respective state under the shop and Establishment Act.

Registration process of sole proprietorship

  • Apply for PAN card.
  • After having the PAN card of business also get the name for sole proprietorship business.
  • Next step is to open a bank account on the name of business. And the entire transactions should be made by that account only.
  • Although there is no need for any specific registration but these are the basic registration is required by the sole proprietor that is given below.
  • If the business turnover exceeds 20lakh then the sole proprietor should register under GST.
  • The sole proprietor can be registered under small and medium enterprises under MSME Act but it is totally optional as it is beneficial not the mandatory.
  • The proprietors need to register under the shop and establishment Act.  in the same state in which the business is located

How to apply for IEC code and what are the benefits

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In the era of competitive business environment every business person wants to grow more. Every business person who has the great mindset and wants fame with their product, they never want to stay limited into a single country, they want to explore more in order to expand their sale around the world. So in order to being a worldwide known business person they has to do export as much as they can and also has to fulfill the compliances but as we know there are lots of compliances to be fulfill for export the things globally there are also one thing which is very necessary to have to initiate the export and that is Importer-Exporter code (IEC)

So here in this article we are going to know about the necessity, benefit and the process to register the IEC code. Importer-Exporter code (IEC) is the most important things for them who are going to start Importing and exporting, if we talks about the validity of the IEC code it will last for the life time once it is created. IEC code is issued by the DGFT (director General of foreign trade) the export merchants can’t avail the benefits from the DGFT and also merchants can’t export without the DGFT code.

Situations where is the IEC is required to have.

• The bank will ask for the IEC when any Importer sends money abroad.
• The IEC will be needed by the custom port when the exporter sends their shipments.
• IEC will be required by the custom authority if any importer has to clear their shipment from the custom port.
• The bank will ask for IEC if the exporter receives money in the foreign currency into the bank.

Benefits of having IEC code

No need to file returns: – There is no need to file any return, even export transaction and also no need to file any return with the DGFT.

Easy processing: – it is very easy to obtain the IEC code from DGFT within the period of 10-15 days after the submission of application and also there is no need to provide proof of Import and Export.

Expansion of business: – IEC is the one of the only thing which helps the exporters to expand their product or service globally and grow the nature of business.

No need to renewal of the code: – If once the IEC has created then no need to renew this again as it will be last for the lifetime. And it is always use for the purpose of export and import transaction.

What documents required to apply for the IEC: – these following documents are required to register the IEC code.

: – There is no need to file any return, even export transaction and also no need to file any return with the DGFT.

No need to file returns: – There is no need to file any return, even export transaction and also no need to file any return with the DGFT.

Easy processing: – it is very easy to obtain the IEC code from DGFT within the period of 10-15 days after the submission of application and also there is no need to provide proof of Import and Export.

Expansion of business: – IEC is the one of the only thing which helps the exporters to expand their product or service globally and grow the nature of business.

No need to renewal of the code: – If once the IEC has created then no need to renew this again as it will be last for the lifetime. And it is always use for the purpose of export and import transaction.

What documents required to apply for the IEC: – these following documents are required to register the IEC code.

it is very easy to obtain the IEC code from DGFT within the period of 10-15 days after the submission of application and also there is no need to provide proof of Import and Export.

No need to file returns: – There is no need to file any return, even export transaction and also no need to file any return with the DGFT.

Easy processing: – it is very easy to obtain the IEC code from DGFT within the period of 10-15 days after the submission of application and also there is no need to provide proof of Import and Export.

Expansion of business: – IEC is the one of the only thing which helps the exporters to expand their product or service globally and grow the nature of business.

No need to renewal of the code: – If once the IEC has created then no need to renew this again as it will be last for the lifetime. And it is always use for the purpose of export and import transaction.

What documents required to apply for the IEC: – these following documents are required to register the IEC code.

: – IEC is the one of the only thing which helps the exporters to expand their product or service globally and grow the nature of business.

No need to file returns: – There is no need to file any return, even export transaction and also no need to file any return with the DGFT.

Easy processing: – it is very easy to obtain the IEC code from DGFT within the period of 10-15 days after the submission of application and also there is no need to provide proof of Import and Export.

Expansion of business: – IEC is the one of the only thing which helps the exporters to expand their product or service globally and grow the nature of business.

No need to renewal of the code: – If once the IEC has created then no need to renew this again as it will be last for the lifetime. And it is always use for the purpose of export and import transaction.

What documents required to apply for the IEC: – these following documents are required to register the IEC code.

If once the IEC has created then no need to renew this again as it will be last for the lifetime. And it is always use for the purpose of export and import transaction.

No need to file returns: – There is no need to file any return, even export transaction and also no need to file any return with the DGFT.

Easy processing: – it is very easy to obtain the IEC code from DGFT within the period of 10-15 days after the submission of application and also there is no need to provide proof of Import and Export.

Expansion of business: – IEC is the one of the only thing which helps the exporters to expand their product or service globally and grow the nature of business.

No need to renewal of the code: – If once the IEC has created then no need to renew this again as it will be last for the lifetime. And it is always use for the purpose of export and import transaction.

What documents required to apply for the IEC: – these following documents are required to register the IEC code.

these following documents are required to register the IEC code.

  • Pan card of the applicant Ex:- individual, firm or company
  • Aadhar card and passport copy of individual.
  • Cancel cheque copies of current bank account of individual’s company’s or firm’s
  • Copy of the rent agreement or electricity bill of the business.

A self-addressed envelope for delivery of the IEC code by the post which is registered

Steps for the registration of IEC code

Step 1: – Application form 

There is a form named by Aayaat Niryaat Form ANF-2A which we have to prepare for the application in the specified format and then we have to file the form with the respective religion office of DGFT.

Step 2: – Documents

Second thing is we have to prepare the document for the purpose of attachment with the form ANF2A just for the respect to Identity, legal entity, address proof, with the bank details.

Step 3:- Filing application

After the completion of the application we have to file it with DGFT by the DSC (digital signature certificate)

Step 4: – IEC code

And then after filing of required application and the application will be approved you will get the IEC code in soft Copy by government.

What is annual report

The annual report is the necessary document which is the explanation of the financial statement of the company. It is the clarification of every financial condition and their activities. The front part of the audit report presents the images, illustration, and the activities over the last year and the back part of the audit report presents the finance and activities.
Mainly the annual report aimed to be prepared to provide the corporate business operation to the public as the annual report have details of all the financial activities of previous year. That’s why shareholders or others, requires this report to analyze the financial position, and all other performance.

These following are the list of stuff which an annual report requires.

  • General corporate details.
  • Letter to shareholder.
  • Financial and operating highlights.
  • Management’s discussion and analysis.
  • Narrative document, image and charts.
  • Financial statement, balance sheet, cash flow statement, and income statement.
  • References to the financial statement.
  • Auditor’s report.
  • Summary of financial data
  • Accounting policy

How can we use the annual report for any purpose?

The purpose of the annual report Is to show the financial condition to the shareholders, debtors, government and etc. so that they can measure the following things about that particular company.

  • Annual report uses to show the profitability or loss
  • Annual report uses to show the growth of the company.
  • Annual report uses to show their ability to maintain earning to increase their profit.
  • Annual report uses to show their expenses and the revenue generate over the years.
  • Annual report uses to show the capacity the company to pay the obligation.

New TDS provision (section 194Q)

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Last year on 2019-20 government has introduced TCS on sale of goods u/s 206C (1H) but then the applicability of this section was restricted to some specified expense and income but now it has covered most of the things and now in the financial year 2020-21 government has introduced one more new TDS provision which is section 194Q. The things are similar in both of the section is the rate of deduction is nothing but just 0.1%, which is not that much bigger. As the government is just aiming to collect TDS on purchase not just to collect the revenue it is to track the details of purchase and all the transaction which is making so that people can’t steal the tax because if once transaction has been recorded than the taxpayers have to mention that into income tax or GST return. Let’s know who are eligible for deduction of TDS 194Q.
A purchaser who is responsible for paying any amount to the any resident seller for purchase of goods exceeding the amount of 50lakh in the previous year, so at the time of crediting the amount on the account seller or at the time of payment making whichever is earlier then the buyer are responsible to deduct TDS equals to 0.1 per cent. Buyer are the person who have the turnover, gross receipt is exceeding the amount of 10 cores.

Applicability of section 194Q

This TDS provision is going to applicable from the date of 01/July/2021, it is applicable on the TDS on purchase of goods.

Conditions are applicable for deductors:-

  1. The purchase should be made by resident person only.
  2. TDS are applicable on advance payment also.
  3. Applicable on only those buyers whose turnover of last year exceeds amount 10crores.
  4. Only applicable if the price of purchased goods or aggregate of value exceeds 50akhs in the previous years.
  5.  The primary liability of this provision is on the buyer’s part, the buyer has to deduct TDS on the aggregate purchased goods.

What is the rate of TDS which is applicable on the purchases?

If the buyer purchases goods from the resident then the TDS should be deduct as 0.1% on payment or if the PAN has not furnished by the seller then rate of TDS will be 5%. As the threshold of the for the section 194Q is 50lakhs if the aggregate sum of goods will not exceed the Rs. 50lakh then there is no need to deduct TDS on purchase.

There are the cases when deduction of TDS under section 194Q is not applicable on the purchases.

  • When the TDS are deductable under any other section then deduction under 194Q is not applicable, suppose if the job work purchases by the buyer then TDS under section 194C will be prevail to apply and 194Q will not be applicable.
  • When TCS charges by seller, suppose if the buyer purchases motor bike then TCS will be charged by the dealer under section 206C(1F), then there is no need to deduct TDS under section 194Q.
  • When seller also liable to charge TCS on sale under section 206c(1H) , suppose if the seller are liable to charge TCS on the sale goods on which the buyer are also liable to deduct TDS under section 194Q then the questions raises whether the TDS should deduct or TCS should charge. Then govt. has said in this situation deduction of TDS u/s 194q will prevail and TCS will not be chargeable
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