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Annual Compliance Checklist for Startups

Updated on :  

08 min read.

A startup running as a private limited company has to follow numbers of compliance as laid down by various statutes and other regulatory bodies. These include but are not limited to the periodic filing of tax and other returns, holding the board and other meetings, maintaining statutory books and accounts etc.

Latest Update

20th March 2020
1. MCA has announced the exemption of physical Board Meetings of the companies until 30th June 2020 for the matters such as the approval of financial statements, Board report, restructuring, etc.

2. Companies and LLPs are advised to implement ‘Work from Home’ policy till the 31st of March 2020, at the headquarters and the field offices across India. Staggered timings may be followed to reduce any physical interactions among the essential staff on duty.

3. A simple web form CAR 2020 is advised to be submitted by the authorised signatory of every company/LLP starting from the 23rd of March 2020 on the MCA website. Know more about the filing process by reading our article on ‘All about CAR 2020’

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

Appointment of Auditor

(E-form ADT-1)

* 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 a 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 AGMMaximum gap of 15 months between 2 AGMs
E- Forms Filing RequirementsE-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 formFresh 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 accounts1)Statutory Registers 2)Minutes Book  * 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 DocsCompany 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 from a case to case basis depending upon nature of the business, product or service provided, the volume of turnover etc.

Non-Registrar compliance

  • Payment of periodic dues (GST Liability, TDS & TCS payment)
  • B. Non-Registrar compliance=”font-weight: 400;”>of periodic returns – (Monthly, quarterly, annual returns- GST, TDS, etc)
  • Monthly/Quarterly GST 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 entrepreneurs get overwhelmed by the number of compliances and in absence of professional guidance end up paying interest and penalties.

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