A startup running as a private limited company has to follow a number of compliances as laid down by various statutes and other regulatory bodies. These include but are not limited to periodic filing of tax and other returns, holding board and other meetings, maintaining statutory books and accounts etc.
Find below a brief overview of the documentation and formalities to be observed and become tax and law compliant.
Non-compliance can attract penalties and may also bring an end to business in extreme cases.
Note: The below checklist is applicable for private limited companies, particularly Small Companies with paid up capital of upto Rs. 50Lakh or having annual turnover in last year below Rs. 2Cr.
The compliances can be categorized as below
- Registrar related Compliance
- Non Registrar compliance
Registrar related Compliance
|Appointment of Auditor
|* First Statutory Auditor has to be appointed within 30 days of incorporation in first board meeting
* Subsequent auditors will be appointed for 5 years in AGM.
|Form ADT-1 is filed for 5-year appointment. After that every year in AGM, Shareholder ratify the Auditor but there is no need to file ADT-1.|
|Holding Board Meeting||* First meeting within 30 days of incorporation
* Minimum 2 meetings, one in each half calendar year.
|Minimum gap of 90 days is required between 2 meetings (ignore if more than 2 meetings held during the year)|
|Holding Annual General Meeting(AGM)||One AGM||Maximum gap of 15 months between 2 AGMs|
|E- Forms Filing Requirements||E-form: MGT-7 File Annual Return within 60 days of holding of AGM for the period 1st April to 31st March.|
|E-form: AOC-4 File Financial Statement: i.e Balance Sheet along with Statement of Profit and Loss Account and Directors’ Report|
|Form MBP- 1 Every Director of the Company in First Meeting of the Board of Director in each Financial Year needs to disclose his interest in other entities by filing the form||Fresh MBP-1 needs to be filed, whenever there is change in his interest from the earlier given MBP-1|
|Form DIR – 8 Every Director of the Company in each Financial Year has to file with the Company disclosure of non-disqualification|
|Directors’ Report||Directors’ Report is to be filed covering all the information required for Small Company under Section 134.||It should be signed 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)Statutory Registers
* Board Meeting Minutes Book
* General Meeting Minutes Book (i.e. AGM, EGM, Postal Ballot, Creditors Meetings, Debenture holders Meetings)
3)Books of Accounts/Financial Statements(section 44aa)
4)Register of Directors Attendance at Board/Committee Meetings.
|Circulation of Financial Statement & other relevant Docs||Company will send to the members of the Company approved Financial Statement, Directors’ Report and Auditor’s’ Report at least 21 clear days before the Annual General Meeting.|
Note: Above mentioned Compliances are mandatory yearly compliances for the Small Private Limited Company. Except above compliances, there may be event-based compliances for the Small Company. For further details read here.
Other Statutory compliances of such private limited companies revolve around periodic filing of tax and other returns, maintenance of books under Income tax Act and other statutes as applicable etc. The compliance requirement differs on case to case basis depending upon nature of busienss, product or service provided, volume of turnover etc.
Find below a list to compliances applicable in most cases:
- Payment of periodic dues (VAT liability, Service Tax Liability, TDS & TCS payment)
- Filing of periodic returns – (Monthly, quarterly, annual returns- VAT, Service tax, TDS, etc)
- Monthly/Quarterly VAT Returns
- Half Yearly Service Tax Returns
- Quarterly TDS Returns
- Assessment of advance tax liability and payment of advance tax periodically
- Filing of Income Tax Returns (Tax will be payable at a flat rate of 30% plus Education Cess)
- Filing of Tax Audit Report
- Regulatory Assessment of business under different acts of law (Eg. Environment and Protection Act, Money Laundering Act, Competition Act, Factory Act etc.)
Often entreprenures get overwhelmed by the number of compliances and in absence of professional guidance end up paying interest and penalties. Need help? Drop your queries at firstname.lastname@example.org.