In this section, we will understand why having a sole proprietorship or a company can help you optimize your income and taxes as a remote worker.

Advantages of setting up a sole proprietorship as a remote worker/consultant/contractor:

If you are hired as a remote worker/consultant/contractor, you can be asked to be paid as a contractor under your sole proprietorship's business bank account (current account). This comes with a wide range of benefits such as:

• The ability to classify assets, products, equipment, and services/goods bought for business purposes as expenses reduce your tax liability.
• You can outsource or hire employees for specific tasks and then classify these expenses as salaries, purchases, etc., thus reducing your taxable income.
• You can claim depreciation for items such as phones, laptops, and cars used for company purposes.
• Bills such as internet and phone bills can be classified as expenses in the company's name.
• Since you bring foreign currency into India, you are exempt from GST.

<aside> 💡 Discuss the process for forming a company and any tax-related information with a CA or auditor before making any decision.

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How to set up a sole proprietorship:

This detailed article by Cleartax goes through what a sole proprietorship is, the advantages and disadvantages, the documents needed to start the application, and the complete process from start to finish on how to get a sole proprietorship of the ground.

Sole Proprietorship Registration Procedure India - Online Procedure & Documents Required