Sole Proprietorship is a kind of business entity managed and owned by just 1 individual. The owner of a proprietorship is personally liable for the debts and losses of the business as the identity of the business is considered to be the identity of the owner.
The annual compliances of a Sole Proprietorship include the filing of Income Tax Return (ITR) and preparing the Tax Audit. A sole proprietorship needs to file an ITR if the annual turnover is more than Rs. 2.5 lakhs. A tax audit is required if the annual turnover of the proprietorship is more than Rs. 1 crore or if the business is under presumptive taxation scheme irrespective of turnover if the income claimed is lower than the deemed profits and gains under the scheme.
After the documents are submitted, the balance sheet of the business is prepared. On the basis of the accounts of the business, the Income Tax Return of the proprietorship is filed if the annual turnover is more than Rs. 2.5 lakhs. The tax audit is required if the annual turnover of the business is more than Rs. 1 crore. The ITR must be filed before July 31 in case no audit is required. If a tax audit is required, the ITR must be filed before September 30.