As a freelancer, we often get so focused on delivering a great product or service; it’s easy to put the administrative part of managing our business on the backburner. However, being a freelancer is not just being free or independent, but it also means that we are business persons. In order to become a successful entrepreneur, it is very important to check the quality of the product or service you offer and most importantly how you organize it and what all you need to comply.
Accounting And Taxation:
Not only Professionals working Under Trade Name, But Freelancers are also required to follow certain compliances. Most important of it is to File Income Tax Returns under Section 139 of IT ACT.
Section 44AA of Income Tax Act requires that every person who is into the profession of law, medicine, architecture, engineering, accountancy, technical consultancy, interior designing, authorized representative, film artist, company secretary and information technology, mandatorily needs to maintain proper books of accounts.
Rule 6F provides for documents necessarily maintained. As per it The books of accounts include the cash book, journal, ledger, carbon copies of serially numbered bills, original bills of expenses incurred and payment vouchers for petty expenses incurred during the year.
The others are required to maintain it only if their Income from the business/profession exceed Rs. 2.5 lakhs for Financial Year 2017–18 (Earlier it was1.2 Lakhs).
With the introduction of Negative List in Service Tax in Finance Act 2012, all the services included in the negative list are exempted from Service Tax. This has widened the scope of the Service tax net considerably since those services not included in the negative list are now taxable.
As for services not mentioned in Negative List as I.T. Services or engineering/ technical services are now taxable and, you are liable to
- Register yourself if gross receipts or ‘aggregate value of taxable service’ in a financial year exceeds 9 lakhs rupees.
- Compulsorily charge service tax on bills raised on clients once ‘aggregate value of taxable service’ in a financial year exceeds 10 lakhs rupees.
A Freelancer May Also Claim Deductions Similar To Those Of Professionals. To claim deductions and even to run a business you need to be incorporated.
LEGAL ENTITIES A FREELANCER CAN GO FOR
To help you decide which entity freelancers, here is a brief overview of common business entities in India. Each state’s laws are different, so it is recommended to consult a lawyer so he or she can advise on current rules and regulations of state before you make a decision.
- Sole Proprietorship
The simplest and most common entity most freelancers work under is a sole proprietorship. It is an individual running his/her own business. It requires paper works. As a sole proprietor, you may give your business a different name for marketing purposes.
- Partnership Firm / LLP
There is more stuff at: http://blog.wazzeer.com/legal-accounting-compliances-every-freelancer-know/
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