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I am running a proprietorship firm, which have about 8 employees, can I withdraw some salary on my name, or it is not allowed?
28th February 2016 From India, Delhi
YES; But, I think it can not be shown as an expense for the purpose of tax deduction under the Income Tax Act for the reason the earnings of the firm and its soleproprietor are treated as one.
28th February 2016 From India, Salem
The business belongs to and you can do want with the money. So if you want to give your self a salary that is ok and your choice.
But whether you give it to your self as salary or as drawings, it will be the same. From tax point of view it will be a non allowable expenses and considered as a part of profit withdrawn from business
28th February 2016 From India, Mumbai
Why do you say it's better not to take a salary.
If you need regular money for personal expenses, it makes good business sense to factor it in as a salary and take that much home. It's then a part of operating cost in the business. Of course, instead you can draw whatever you need instead of salary.
The point we all made was from tax point of view, it makes no difference whether you draw a salary or not.
29th February 2016 From India, Mumbai
Yes, as a director you have to draw your salary every month. Like other employees, there should be a bank account (salary account) to director.
Director also has some roles & responsibilities and he has to get paid for it.
Director should enjoy all the benefits given to the employee.
29th February 2016 From India, Vijayawada
I don't think a Prop. will be considered as a Director drawing salary. Of course the Prop. is entitled to Out of pocket exp./entertainment exp. etc. and drawings for his own or domestic uses. But drawings alone cannot be treated as expenses of the firm as all drawings will be accounted in Prop's Capital a/c but not in the Profit & Loss A/c treating as exp. of the firm.
My suggestions are, instead of 'as salary' you may draw money from the firm as 'drawings' and account various expenses that you incur as expenses like-staff welfare, repair & maintenance, vehicle running & maint. exp., business promotion, travel/local conveyance exp., stationery, upkeep of buildings etc. depending on the nature of payment based on the bills you could attach. This type of treatment might solve your query.
2nd March 2016 From India, Bangalore
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