Is EPF and ESIC applicable on Sole Proprietorship firm - 4 employees

I run a small architecture firm in Noida with a turnover of up to 30 lakhs. I have two employees who earn 20,000 per month each, a driver who is paid 10,000 per month, and a peon who receives 5,000 per month.

Would EPF and ESIC be applicable to my firm? Also, please provide guidance on TDS.

EPF not applicable.
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Pon

Corrected:
EPF not applicable.

Pon

Dear Member,

Firstly, please let me know the constitution of your establishment - is it Proprietary, Partnership, or a Private Limited Company? In the case of a Private Limited Company, the Directors are included in the definition of employees for determining the applicability of the ESI Scheme. Additionally, kindly provide the total strength of your firm, which should encompass both Regular Employees and those engaged through contractors such as Security, Housekeeping, etc.

Also, please inform me if you undertake contracts for comprehensive packages, including Design and construction of projects from A to Z. In such cases, all employees you engage will be considered employees of your firm as you will be employing them during your business activities. Furthermore, please clarify whether your Head Office is located in Delhi or if your operations are solely conducted from your Noida Office. This distinction is crucial as the laws governing the applicability of ESI differ between Noida (and Uttar Pradesh) and Delhi. However, the application of EPF laws remains consistent across Delhi, Noida, and other regions in India, except Jammu and Kashmir.

Your turnover holds no relevance in matters related to the application/compliance of Labor Laws or TDS under the Income Tax Act. I can offer guidance on ESI and PF matters, having dealt with these for the past 15-16 years. For TDS-related queries, I recommend consulting your Chartered Accountant for accurate advice. Regarding TDS, my understanding is that any individual making payments exceeding the limits specified in Section 194 of the Income Tax Act must deduct TDS as per the rates prescribed by the government, unless the payee is exempted by the Income Tax Department.

Sincerely,

Amit

Thanks, Amit sir. However, I am working from my own home in Noida, Uttar Pradesh. It is a proprietorship company, and I am the sole in-charge. We have 4 staff members - 2 designers, 1 driver, and 1 peon. That's all. We are not engaged in construction, only design.

As mentioned by Mr. Pon, EPF is not applicable to you at this stage. With regards to ESI, Mr. Amit has asked for some details to conclude the applicability. Last but not the least, please provide us with the salary structure, i.e., basic, HRA, conveyance, etc., to determine the TDS. TDS is not applicable for salaries below Rs. 1.80 Lac p.a., i.e., 15k p.m.

Dear Member,

You are currently free from labor compliance. However, as your business grows, it is essential to stay cautious. Stay in touch with a knowledgeable Chartered Accountant (CA) who will assist you not only with the TDS aspect but will also guide you on various other statutory laws of the land which you may be unaware of due to your understandable ignorance in the matter. This assistance will prove invaluable in the future.

Sincerely,
Amit Kumar

QUOTE=astamhazra07@gmail.com;1978514]Thanks Amit sir,

I run my business from my home in Noida, Uttar Pradesh. It is a proprietorship company, and I am the sole in-charge. We have a total of four staff members - two designers, one driver, and one peon. That is all. Our business focuses on design and does not involve construction. [/QUOTE]

Dear Member,

You are free from labor compliance at this point of time, but be careful when your business grows and be in touch with a knowledgeable CA who'll help you not only in TDS aspects but also assist you with various other compliances of the statutory laws of the land, which you may not know due to your understandable ignorance in the matter. This will help you immensely in the future.

Sincerely,
Amit Kumar

Hi All,

I just wanted to know the procedure for opening a bank account for a sole proprietorship. Actually, I'm working from home and want to open a bank account under the company name for my sole proprietorship.

Regards,
Nisha
nisha4_sharma@yahoo.com

Dear Ms. Nisha,

You can either open your bank account in your personal name (saving A/c.) or you can open a Current Account in the firm's name. The documents will be the same as that of a personal account, but only the Letterhead and the Rubber Stamp of the firm will be extra to be attached. Rest all the formalities are similar.

Dear Nisha,

I opened a current bank account a few months ago, both under the Partnership and as a Proprietorship, and I have learned that the process of opening an account has changed significantly from earlier times. I suggest that if you are running a business, you should use a current account only in the name of the firm, whether it is a Proprietorship or a Partnership.

The bank requires the following documents: the letterhead of the firm, the rubber stamp of the Partner/Proprietor, PAN of the Firm (if partnership) or Self (if Proprietor), one Government Registration of the Business such as Sales Tax for Trading or Service Tax No. for the Service Industry, or any business-relevant Government Registration Proof. If none of these are available, then a copy of the Shop & Establishment Act Registration certificate of the firm can be obtained online without any cost or formalities, especially in Delhi. Additionally, an introducer known to the bank as well as to you, who has been a current account holder for at least six months, will be required to introduce your firm to the bank. I also suggest that if you are not heavily reliant on home delivery banking services, you should opt for a Government Sector Bank rather than a Private Sector Bank. Government banks typically have a minimum balance requirement ranging from Rs. 2500/- (OBC) to Rs. 5000 (Allahabad Bank) and Rs. 10000/- for SBI, while many Private Sector Banks have a ceiling of Rs. 25000 - ING, etc. Therefore, it would be wasteful to park such a sum without any productive use.

Hope this information helps.

Sincerely,

Amit

Kindly let me know the leave policy and labor laws applicable in a proprietorship firm.

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Dear User,

I have reviewed your message and made the necessary corrections. Here is the revised version:

"Kindly let me know the leave policy and labor laws applicable in a proprietorship firm."

If you have any further questions or need additional assistance, feel free to ask.

Thank you.