Trading as a small firm - Questions

[[email protected]]

Hi,
I want to start a company for financial services. I've few questions..

1. Can I trade using my company name, acc?
2. How tax will be calculated? whether as individual or as SME?
3. Can I use my internet usage, trading expense as business expense?
4. Do I've to get any kind of license from broker or from sub-broker?
5. If I set-up SW firm, can I do trading as part of my SW firm for hedging purpose?


Rgds
Vignesh

 

[sihasan]

Hi Vignesh,

I too plan to start trading by registering LLP, and have same questions as you. Did you happen to get the answers to the same?

Regards,
siHasan

 

[[email protected]]

Not precisely!!! although i got some useful info...

Based on current tax and future taxation (i.e. new tax law from 2011):
1. If firm is registered as sole properitership, then individual income and firm income are clubed together.
2. Internet expense and other expense used for trading as business can be claimed under business expenditure.
3. F&O STT can be claimed as business expenditure in current tax law, however this is not applicable in new tax (coz STT is removed).

==> Its very costly to get membership directly from NSE/BSE and even sub-broker as well, unless, breakeven is achieved early.
==> did not get any info hedging and trading in NSE/BSE throught a broker like ICICI, HDFC etc but registered to them as company not as individual.


if u get any info or any additional info, please share..

-Vignesh

 

[NiftyFantasy]

Not precisely!!! although i got some useful info...

Based on current tax and future taxation (i.e. new tax law from 2011):
1. If firm is registered as sole properitership, then individual income and firm income are clubed together.
2. Internet expense and other expense used for trading as business can be claimed under business expenditure.
3. F&O STT can be claimed as business expenditure in current tax law, however this is not applicable in new tax (coz STT is removed).

==> Its very costly to get membership directly from NSE/BSE and even sub-broker as well, unless, breakeven is achieved early.
==> did not get any info hedging and trading in NSE/BSE throught a broker like ICICI, HDFC etc but registered to them as company not as individual.


if u get any info or any additional info, please share..

-Vignesh

Yes definitely you can start a company/firm for doing trading business, as you know proprietorship firm's net profit will be added in ur indvidual income. You can also claim all your expenses as a common company/firm it can be electric bill, telephone, internet, salary to staff (who will do ur bank work/order execution etc.), conveyance, office exps, depreciation etc.etc. as usual. But i dont know how the audit turnover limit will be calculated bcz todays 40L limit will be break on very first day of trading.
Preveviously STT was treated by IT deptt. as advance IT (prepaid taxes) but now it can be deducted as expenses only. that is a big loss for the tax payers. now we are getting only 20-30% of STT back by showing it as expenses.
U can also do it along with ur s/w firm but you will have to break ur trading & PL a/c in two parts one for trading and 2nd for s/w business.

aboves are my observation but can be wrong somewhere


rgds
Abhi