Hello friends, I run a web solution business. Providing web designing and development services mainly. I'm planning to pay tax and manage complete file properly. I have few doubts please check out and answer the questions which you know please do it 1. Should I register my business. If its optional is there any benefit doing it? 2. As my PAN card will be in both Paypal account and Bank account I will need to show both statements in my file. So wont it be double? I mean I will get 1000USD in Paypal ( so it will be income ) then I withdraw it to Bank account ( again it will be income lol? ) Sorry there must be some way around it but I'm not sure how it will work. 3. If I register a company and I add my family member as a partner then will tax % decrease. For example if I'm earning 10Lax a year then it will be 30% tax right? suppose if I make my family member as partner of 50% then earnings will be 5Lax of individual then my tax % will be lower right? 4. Payments made using Paypal can be shown as expenses right? but how about earnings? I should show my paypal earnings or withdrawn to bank account as earnings? 5. If company registration is required then under which field and in which department? 6. Should we take print out of all paypal transactions? or just monthly statement print out will be fine? Hoping to get complete ideas about it. This will surely help many more members here. Thanks
why not consider talking to a good CA in your place. Just give him some $$$ and he will give you the best advice on this.
To be true local CA wont understand what is Paypal or how it works. I will try to contacting one tomorrow. Thanks
They don't need to know paypal or any specifics, so they could still help you. Get above the technolgy. I think you should reseach Accural accounting. that may help you see through it all.
I had been filing Income tax returns for last two years with the help of my C.A, He told me that the income that you realized in your bank account must be treated as income and not the funds that are in your paypal account. Now since this new changes that paypal also requires pan card, i'll have to refer my C.A once again before filing income tax return for this year.
There are Four types of business options available (Sole Proprietor, Partnership, LLP, Ltd. Company). There is no registration required for sole-proprietorship. You just need to select a name and open a current account. For other business options there are certain procedures which you need to follow. You can contact your CA for the same. Simply transferring money from one source to another is not income. Your income is the value received for the services you provided. If you have provided services for credit, even that would be your income and will be shown as outstanding income. You give the details of all your trnsactions, both paypal and bank and your accountant/CA will able prepare your final accounts. There are a lot of options here. Your CA is the best person to guide you on this. Partnership firm is taxed as a separate entity along with the partners. Payments made for your business related expenses can be in your expenses. Rest expenses will be simply drawings for personal use.
I guess everybody showed only the final withdrawal into the bank account as income... till date. I am puzzled too.. whether to start treating Paypal account like any other bank account as well. Do revert back with the suggestion of your C.A. It always helps to know other people's view as well! Regards, RightMan
yes,Just shows Banks withdraws as income. I don't show expenses pay by paypal as expenses as I pay them from by paypal balance. Rest of expenses (computer,offic rent,salary paid,deprecation,electricty,Tea/coffee/snacks,watchman,cleaner,Travel to clients (Local) and all XYZ comes under normal expenses) Hire a CA and a accountant.Should only cost about 25000 INR a year in total.
Thanks for your replies guys. I have few expenses in paypal too so I think I can show them as expenses. I'm just confused with Paypal income and Bank withdrawals which should be showed as income as IT have access to both now.
The approx. cost is around Rs.1500 to Rs.5000 based on the volume for all unaduted accounts in Mumbai charged by many CA's. Choose a CA who is well versed with online business!