Running a business is a challenging operation. Apart from being knowledgeable when it comes to financial matters, it is also necessary to stay informed about legal matters. There are several official processes that must be completed in the course of establishing a business.
The chief of them being the filing of tax returns. Apart from Income Tax Returns, businesses in India that fall in the category of goods and service providers, with an annual turnover of rupees 40 lakhs or more (except in northeastern and hill states) must enlist under the gst bill.
In this article, we shall take a look at the documents you would require to fulfil tax-related legal obligations while operating a business in India.
What are the Basic Categories Businesses Fall Under?
The reason for examining the different types of businesses is they are taxed differently and thus may have slightly different official requirements. Let’s look at each one closely.
- Sole Proprietorship
These businesses are managed by a single person who has sole ownership of all of the company’s assets. These businesses are small and/or have a limited external investment. The owner and the business are defined as a single legal entity.
This means that the earnings of the company are considered a part of the owner’s personal income and taxed accordingly. Therefore, when filing tax returns, documents for income from property, personal loans and interest income or any additional income or expenditure are required.
- One Person Company (OPC)
Similar to a sole proprietorship, a single owner or founder controls the company’s assets. However, the owner and the business are two separate legal entities and are thus taxed accordingly.
These businesses have two or more owners known as ‘partners’. The company’s assets extend to the partners of the company, and this affects the way it is taxed.
- Limited Liability Partnership (LLP)
Similar to a partnership, this business will have multiple owners. However, unlike a partnership, their liability in the company is limited to their contribution to it. From here on, businesses are required to pay corporate tax irrespective of whether they experienced profit or loss in the financial year.
- Private Limited Company
With private shareholders, these businesses are small, and the company is a separate legal entity from its owners or founders.
- Public Limited Company
Members enjoy a separate legal identity from the company. These businesses are free to trade their shares publicly. The number of shares a member holds determines the extent of their liability to the business.
What Documents Are Required For Tax-Related Purposes?
There are some basic documents required to be possessed by businesses across all categories. These are required for registration as well as taxation purposes. These include:
- The right Income Tax Return (ITR) forms
- PAN card of owner/owners
- Company PAN card
- Aadhaar Card linked with PAN card.
- Documents with bank account details (passbook, chequebook, etc.)
- Address proof of the office.
- ID proof of owner or partners/shareholders
- Address proof of owner or partners
- Certificate of Incorporation.
- Property documents
- Documents of loans taken and/or given
- Interest income statement (For sole proprietors)
- TDS certificate
You will also need official documents with details of the various assets and liabilities of the business and debtors and creditors of the business.
In case of a business that falls under the purview of the GST Bill, the GST Registration Certificate with the assigned GSTIN or GST number is required. That can only be obtained once the business has been registered on the official government website. For that, you will require certain additional documents apart from those mentioned already.
These are as mentioned below:
- Photographs of business owner/owners
- Partnership deed
- ID documents of Authorised signatory
- Proof of appointment of Authorised signatory
- Proof of registration in case of LLP, Public and Private Limited Companies
Once registration is approved, gst certificate download must be carried out before you can file tax returns. Some other documents required for filing GST returns include bills and invoices that record details of expenditure and amount to be paid under GST.
While audits are often done externally, being up to date on the legalities and requirements of the procedure always helps. It might seem complicated; however, having the right documents and required registrations in hand well in advance, simplifies the process and helps keep all activities within your business above the board and safe from legal scrutiny.