• Sole proprietorship

Hi,

I am a free lance consultant, giving project management consulting for Private Financing and Real Estate. All of the projects that I am handling are in pipeline as of now, so none of the leads have been closed yet. My query here is as the consulting fee will be structured based on the total value of the business, the projections will come in high figures. So as my understanding i cannot get the fee credited to my Savings account. So kindly advise what would be the best way legally, is it to register a firm, or is it still possible to work as a freelancer and can receive higher remunerations without any legal constraints.

Thanks
AM
Asked 2 years ago in Business Law from Bangalore, Karnataka
1. Since it is consulting business of high projects it is advisable if you forma a Firm albeit a proprietorship firm.

2. Show the fees received by the Firm as the income of the assessee in the ITR of the Firm.

3. if you project your income as that of the Firm then you can show lot of expenditure towards running the Firm to show lesser profit in file for the purpose of income tax assessment.
4. Proprietorship Firm need not e registered. A  ITR file in the name of the Firm is enough to take care your Tx hassles.
Devajyoti Barman
Advocate, Kolkata
5248 Answers
54 Consultations
4.9 on 5.0
1. The Trade license in the name of the Firm, the ITR in the name of the Firm, the bank a/c in the name of Firm are enough to prove its existence.
2. Yes PAN should be different from that of the owner.
3. The income is assessable for the purpose of the income tax payments.If you pay the correct amount of income tax then there is nothing to worry.
Devajyoti Barman
Advocate, Kolkata
5248 Answers
54 Consultations
4.9 on 5.0
. 1)there is no formal procedure to register sole proprietorship as sole proprietor is considered extension of proprietor 

2) existence of sole proprietorship can be established by opening bank account in name of firm or obtaining licences required for running business 

3) RBI KYC norms mandate that to open bank account in name of sole proprietorship any two  of following documents may be submitted 

a) certificate issued by muncipal corporation under shops and establishment act 
b) sales and income tax returns

c) registration certificate issued by service tax/ profession tax authorities 

d) CST/VAT certificate 

e) Registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc.

 f)  Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
Ajay Sethi
Advocate, Mumbai
23367 Answers
1224 Consultations
5.0 on 5.0
Dear Querist
You may register your firm as sole proprietor firm before registrar of firm. It is not mandatory but will be better for future requirements. 
After registration you can apply for service tax, pan card, current account. 

Total payment should be credit in current account and you have to file income tax return and service tax return on behalf of your firm.
Nadeem Qureshi
Advocate, New Delhi
3537 Answers
130 Consultations
4.9 on 5.0
1. Since you want to start a sole proprietorship firm, you need not get registered under firm and societies registration. Registration under shop and commercial Establishment Act is enough.

2. Also required is a bank Account in the name of your Sole Proprietorship business.To start a sole proprietorship, all you need is a bank account. Go to a bank, open a bank account in the name of the firm. 

3. You will require a PAN Card of the Sole Proprietor.

4. Service tax registration for businesses providing services is mandatory for companies in India who's turnover has crossed Rs. 9 lacs.

5. Company providing goods will have to register for Value Added Tax or VAT (within same state) and/or Central Sales Tax or CST (between states) once their turnover has crossed Rs. 5 lacs, as it becomes mandatory then.
    
6. Other Registrations such as Importer Exporter Code (IEC), Professional Tax, Shop and Establishment License, etc. must be obtained, if applicable.

7.  In case, you employ more then 10 persons, you have get register your under Factories Act and also have to obtain code nos fro EPF and ESI departments.
Ashish Davessar
Advocate, Jaipur
18183 Answers
449 Consultations
5.0 on 5.0
1. The firm will owe its separate existence to the bank account, trade licence and its ITR. Nothing else is required.

2. The sole proprietorship firm requires its own PAN card.

3. As long as there is no tax evasion the large funds shall not pose any problem to you.
Ashish Davessar
Advocate, Jaipur
18183 Answers
449 Consultations
5.0 on 5.0
1. Though you are cexpecting high fees for providing advices for high value projects, it is not illegal to accept such heavy amount in your savings bank account,

2. From your said savings account also you can show expenses, while filing your I.Tax return,

3. It is not necessary to open a company to accept high value peyments.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
1. If you open a proprietorship firm, you shall have to collect trade license, 

2. For proving the existance of the proprietorship firm, you can submit the said trade license,

2. The ITR, PAN Card, bank a/c no. etc. should be in the name of the proprietorship firm.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Business Lawyers

T Kalaiselvan
Advocate, Vellore
14151 Answers
127 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23367 Answers
1224 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18183 Answers
449 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5248 Answers
54 Consultations
4.9 on 5.0
Nadeem Qureshi
Advocate, New Delhi
3537 Answers
130 Consultations
4.9 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2771 Answers
41 Consultations
4.9 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
873 Answers
43 Consultations
5.0 on 5.0
Lakshmi Kanth
Advocate, Hyderabad
230 Answers
2 Consultations
4.8 on 5.0
Shashidhar S. Sastry
Advocate, Bangalore
1242 Answers
59 Consultations
5.0 on 5.0