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Annual Compliances 2019-01-08T10:33:36+00:00

Annual Compliance Checklist for Startups

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Annual Compliance

A startup that runs as a private limited company has to follow numbers of compliance as set aside by various laws and other regulatory bodies. These comprise of but is not limited to the periodical filing of tax and other returns, holding the meetings, preparing statutory books and accounts etc.
Exports would be zero-rated.
Tax is divided between the Central and State Government.

An example for IGST:

Consider that a businessman hailing from Maharashtra had sold goods to another businessman from Gujarat worth Rs. 1,00,000. The GST rate is 18% composed of 18% IGST. In such a case, the dealer charges Rs. 18,000 as IGST. This IGST then goes to the Centre.

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Given below is a brief overview of the documentation and rules to be observed and become tax and law obedient.

Non-compliance can bring in penalties and also can end the business in extreme cases.

Note: The given below checklist is appropriate for private limited companies, especially Small Companies having paid-up capital of up to Rs. 50Lakh or holding annual turnover in last year below Rs. 2Cr.

The compliances can be categorized as below:

  1. Registrar related Compliance
  2. Non-Registrar compliance

A. Registrar related Compliance

Appointment of Auditor(E-form ADT-1)
  • First Statutory Auditor is generally appointed within 30 days of incorporating the first board meeting
  • Following auditors will be appointed for 5 years in AGM.
Form ADT-1 is registered for a 5-year appointment. After that every year in AGM, Shareholder approve the auditor but there is no need to file ADT-1.
Holding Board Meeting
  • First meeting is held within 30 days of incorporation.
  • Minimum 2 meetings are needed, one in each half calendar year.
A minimum gap of 90 days is needed between 2 meetings (ignore if more than 2 meetings took place during the year)
Holding Annual General Meeting(AGM) One AGM

E-form: MGT-7 File Annual Return in 60 days of holding of AGM for the period 1st April to 31st March.

The maximum gap of 15 months within 2 AGMs
E-Forms Filing Requirements E-form: AOC-4 File Financial Statement: i.e Balance Sheet with Statement of Profit and Loss Account and Directors’ Report
Form MBP- 1 Each Director of the Company in First Meeting of the Board of Director in each Financial Fresh MBP-1 requires to be filed, whenever there is a change in his interest from the earlier given MBP-1
Year should disclose his interest in other entities by filing the form
Form DIR – 8 Every Director of the Company in every Financial Year needs to file with the Company disclosure of non-disqualification
Directors’ Report Directors’ Report is to be filed that covers all the information needed for Small Company under Section 134. It should be approved by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors.
Statutory registers and books of accounts
  1. General Meeting Minutes Book, Statutory Registers
    Minutes Book
    Board Meeting Minutes Book
    (i.e. AGM, EGM, Debenture holders Meetings,Postal Ballot, Creditors Meetings)
    Books of Accounts/Financial Statements(section 44aa)
    Register of Directors Attendance at Board or Committee Meetings.
Circulation of Financial Statement & other relevant Docs The company will send the approved Financial to the members of the Company Statement, Directors’ Report and auditors report given at least 21 clear days prior to the Annual General Meeting.

Note: Above mentioned Agreements are mandatory annual compliances for the Small Private Limited Company. Besides the above compliances, there may be event-based compliances for the Small Company.

Other Statutory agreements of such private limited companies revolve about the periodic filing of tax and other returns, maintenance of books that come under the Income-tax Act and other statutes as appropriate etc. The compliance element differs from a case to case basis depending upon the nature of the business, product or service provided, the volume of turnover etc.

B. Non-Registrar compliance

  • Return of periodic dues (TDS, GST Liability & TCS payment)

  • Filing of periodic returns – (Monthly, quarterly, annual returns- GST, TDS, etc)Monthly/Quarterly GST Returns

  • TDS Returns on a quarterly basis

  • Evaluation of advance tax liability and payment of advance tax annually

  • Filing of Income Tax Returns (Tax that is payable at a flat rate of 30% plus Education Cess)

  • Filing of Tax Audit Report

  • Regulatory Evaluation of business under various acts of law (Eg. Environment and Protection Act, Money Laundering Act, the Competition Act, Factory Act etc.)

Often entrepreneurs get confused by the number of compliances and in the inadequacy of professional guidance they end up paying interest and penalties.