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DIFFERENCE BETWEEN COMPANY COMPLAINCE TAX AND LLP TAX COMPLIANCE

Shiva Dubey (166 Points)

04 March 2024

I WANT KNOW THE THE DIFFERENCE BETWEEN COMPANY COMPLAINCE AND LLP AND PROPRITER TAX COMPLIANCE

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Yasaswi Gomes new (Finance ) (4514 Points)
Replied 04 March 2024

Company Tax Compliance, LLP Tax Compliance, and Proprietor Tax Compliance:

Company Tax Compliance:
- Company Structure: A company is a separate legal entity formed under the Companies Act.
- Taxation:
  - Double Taxation: Companies are taxed twice:
    - First at the corporate level (company tax) based on company profits.
    - Then again at the shareholder level (dividends) when profits are distributed to shareholders.
  - Complex Reporting: Companies have more complex reporting and filing requirements.
  - Statutory Audit: Companies need to undergo a statutory audit regardless of turnover.
  - Board Meetings and AGMs: Companies are required to conduct board meetings and Annual General Meetings (AGMs).
  - Examples: Private limited companies, public limited companies.
LLP Tax Compliance:
- LLP Structure: An LLP (Limited Liability Partnership) combines features of a company and a partnership.
- Taxation:
  - Individual Partner Level Tax: LLPs are taxed once at the individual partner level.
  - No Double Taxation: Unlike companies, there’s no double taxation at the corporate and shareholder levels.
  - Simplified Reporting: Compliances related to board meetings and AGMs do not apply to LLPs.
  - Statutory Audit Threshold: LLPs do not require a statutory audit if their turnover is below ₹40 lakhs.
  - Examples: Professional firms, consulting businesses.
Proprietor Tax Compliance:
- Proprietorship: A sole proprietorship is the simplest business structure where an individual owns and manages the business.
- Taxation:
  - Individual Tax: The proprietor is taxed individually based on their income from the business.
  - Unlimited Liability: The proprietor has unlimited liability, risking personal assets.
  - Simplicity: Proprietorships have simpler compliance requirements than LLPs or companies.
  - Examples: Small businesses, freelancers.

Remember that the choice between these structures depends on factors like liability, taxation, reporting, and business needs. Consulting a professional advisor is recommended for personalized guidance.

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