• Proprietorship

Iam having propitorship business... and in the balancesheet of my business i have shown the assests and buildings used in my business... ihave shown my current account but my my accountant also showed all my business accounts in my business balancesheet of propitorship... is it correct to show savings accounts in business balancesheet..? And also i have a personal loan for my home .. the accountant didn’t show my home in balancesheet bcz only the business assests r shown but the laiblity of personal loan taken for my home is shown in thr balancesheet... bcz the loan amount came in savings account amd from there he shows the drawing and the liablity to repay loan is there in balancesheet.. is it correct?
Asked 4 years ago in Income Tax

- If the home loan is coming in the balance sheet then property should also come.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Hello,

 

Yes, savings accounts would be declared in the Balance Sheet for proprietorship.

And both home loan as a liability and home as an asset(not eligible for depreciation) would be recorded in the Balance Sheet.

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

 

Hunny Badlani
CA, Madhya Pradesh
2608 Answers
16 Consultations

5.0 on 5.0

Hello Sir,

 

Yes, it is correct to show savings accounts in business balance sheet as it is a proprietorship.

 

Also, you need to show the both in the balance sheet- loan as a liability and property as an assets. 

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

- In Income tax, there is no difference between the sole proprietor and the business run by him. It is treated as a single person. In the ITR, if the income is solely from the business income then you can prepare the balance sheet and Profit & loss account of business only. If the income is from other sources also, it is advisable to prepare financials comprehensively. 

- In your case, if you are availing benefit of interest and principal component on housing loan then it is recommended to include housing loan and property as well.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

If you are using saving account for business purpose then you need to show it in business balance sheet and i advice to use current account only for business purpose.

Also if you have take loan for house and the amount comes in saving account then you can show such loan in capital account however if you are going to show loan in balance sheet then you must show such asset also.

If you are uploading only business balance sheet then include only business asset however if you are going to show personal asset then include all personal asset.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Individual and proprietorship firm are the same person. Balance Sheet created for the firm should also include savings account and personal assets.

Hunny Badlani
CA, Madhya Pradesh
2608 Answers
16 Consultations

5.0 on 5.0

Dear Sir,

 

As per my understanding, there is no need to show personal loan in balance sheet of business proprietorship.

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

You need to show the business assets and liabilities only in your business balance balance sheet.

 

Personal assets which are using in business also for business purpose can be shown in balance sheet of the business.

For the purpose of Drawing balance sheet of proprietor and Business please draw the business balance sheet in the normal manner as it is drawn and then draw the proprietor considering the personal assets which are not considered for business.


Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

If your business transactions are done through saving account then you need to show it in business balance sheet.

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Hi,

 

You need to take a stand 

 

1. Either show only business assets/ liabilities in your balance sheet: or

 

2. show both business assets/ liabilities and personal assets/ liabilities in the balance sheet.

 

You cannot pick and choose to show some personal assets but not personal liabilities

Lakshita Bhandari
CA, Mumbai
5687 Answers
908 Consultations

5.0 on 5.0

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