Accounting for a proprietorship
A proprietorship is not a separate taxpayer. Your business income goes into your own income tax return, so there is no company return and nothing at all to file with the Registrar of Companies. What you do owe is GST once you cross the threshold or sell across state lines, TDS once your turnover makes you liable to deduct, and advance tax through the year. Presumptive taxation can make the income tax side much simpler, and it is the thing most proprietors are never told about.
What applies to you
The rules that apply because of how you are registered.
No separate business return. Your business income is part of your personal income tax return. One taxpayer, one return.
No ROC filings. You are not registered with the Registrar of Companies. None of the ₹100 per day per form exposure applies to you.
Presumptive taxation may apply. Under the presumptive schemes you declare a fixed percentage of turnover as income and skip detailed books. For many small proprietors this means less tax and far less paperwork.
GST once you cross the threshold. Or straight away if you sell across state lines or through a marketplace, where the threshold does not protect you.
TDS only above a turnover limit. An individual is liable to deduct TDS only once the previous year's turnover crosses the limit. Below it you do not deduct, which surprises people in both directions.
Advance tax across the year. Four instalments. Skipping them costs interest, and it is the most common small penalty a proprietor pays.
What we do about it
What we take over.
Books every month. Kept properly and kept separate from your personal spending, which is the single most useful thing a proprietor can do.
GST returns. Prepared and filed each period, with input credit matched against GSTR-2B.
Your income tax return. Business income included and computed correctly, with the presumptive option checked against the regular one.
Advance tax, before each date. We tell you the amount rather than leaving you to guess.
Notices handled. Forward it on WhatsApp. Routine notices are inside the fee.
The simplest structure in India is also the one where business and personal money most often become the same pile.
Questions
What people in your position ask.
Do I need to file a separate return for my business?
No. A proprietorship has no return of its own. Your business income is reported inside your personal income tax return, in the schedules for business income. There is one filing, not two.
Should I use presumptive taxation?
Often yes, if you are eligible and your real margin is above the presumptive percentage. You declare a fixed share of turnover as income, and the detailed books and audit requirements ease off. If your actual margin is lower than the presumptive rate you would be paying tax on profit you never made, so it is a calculation, not a default. We run both and show you the difference.
Do I have to register for GST?
Not until you cross the turnover threshold — unless you sell across state lines or through an online marketplace, in which case registration is generally required from the first sale regardless of turnover. This catches a lot of small online sellers.
Should I convert to a Private Limited company?
Only for a real reason: raising investment, limiting liability, or a customer who will not contract with a proprietorship. Converting adds an audit, ROC filings and the uncapped late fee. It is a genuine step up in cost, and it should buy you something specific.
By business structure
Not quite you?
- Private Limited
The heaviest compliance load, and the one with the uncapped late fee.
- LLP
Lighter than a company, but the uncapped ROC fee still applies.
- One Person Company
A company in every way that costs money, with a lighter annual return.
- Partnership Firm
No ROC at all. The tax work is where the money is won or lost.