Business Management

Managing a business is not easy. When a business is managed properly and timely decisions are made, it will move in the right direction and earn profits. In a proprietorship firm, the sole proprietor manages the entire business. In a partnership firm and LLP, all the partners manage the business. 

However, various people, such as the board of directors, CEO, CFO, CMO, shareholders, and directors, are involved in the business management of a company. Business management also involves ensuring various compliances are met by the respective persons of the firm or company under the applicable laws.

Business Management Aspects

The various aspects of a business that a person must manage are as follows:

• Day-to-day operations of the business
• Obtaining the required raw materials or goods for the business 
• Getting resources for the development of a product or service
• Maintenance and audit of books of accounts
• Maintenance of stocks or products of the company or firm
• Ensuring delivery of goods or services within the timeframe
• Vendor management
• Operation of the bank account and money transactions
• Borrowing loans or finding investors
• Creation of plans and ideas for marketing the business 
• Appointment of employees or workers and taking care of their welfare
• Handling legal aspects, such as vendor agreements, service level agreements, contracts, appointment letters, etc. 

Since business owners or directors must look into many aspects of a business or company, appointing the required employees or hiring an agency to handle the business becomes necessary. However, all these employees or agencies will report to the owner or directors of the company, who will make final decisions for the business or make changes in the business operation.

Compliances to Ensure Proper Business Management

In India, all firms and companies must adhere to certain compliances under the applicable laws to avoid penalties and other legal consequences. The compliances necessary for operating a business are provided below.

Maintenance of Accounts 

All businesses must maintain books of accounts. Partnership firms and companies exceeding certain sales or turnover limits must get their book of accounts audited by a qualified auditor. Companies and LLPs must also file their financial statements and annual returns with the Registrar of Companies.

Partner and Directors Appointment

All partnership firms and LLPs must report details regarding the appointment and resignation of partners to the Registrar of Firms and Registrar of Companies, respectively. Similarly, companies must file details regarding directors with the Registrar of Companies. 

A company may also appoint key managerial personnel, such as the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Managing Director or Whole-Time Director. The details of the key managerial personnel details should also be provided to the Registrar of Companies.

Employees Provident Fund

Any business employing more than 20 employees must compulsorily register under the Employees Provident Fund Organisation (EPFO). All business owners or companies must deduct 12% monthly from the employee’s basic wages and deposit it with the EPFO. Employers must also contribute a matching amount towards the employee’s EPF account. 

The employees can partially withdraw their Employees Provident Fund (EPF) account contributions for various reasons, such as medical emergencies, construction or purchase of a house, marriage, education, etc. They can completely withdraw their EPF amount upon retirement or two months of unemployment.

Employees’ State Insurance 

Any business employing more than 10 employees (20 employees in some states) earning monthly wages below Rs. 21,000 must compulsorily register under the Employees’ State Insurance Corporation (ESIC). Employers contribute 3.25% of the wages paid to an employee to the Employees’ State Insurance (ESI) every month. They also deduct 0.75% of the wages from the employees’ salaries and contribute to the ESI monthly. 

Employees can get money from ESI in the event of any medical emergency, such as cash during sickness, medical care and treatment expenditure, maternity benefits, funeral expenses, disablement benefits or benefits to dependents of an employee upon his/her death due to employment injury.

Investor Education and Protection Fund

Investor Education and Protection Fund (IEPF) protects the interest of company investors. The company pools and credits the unpaid or unclaimed amounts belonging to the shareholders into the IEPF. 

The company transfers the shareholder’s amounts remaining in the unpaid or unclaimed dividend or shares account for seven years into the IEPF. Any shareholder whose amount the company transfers from the unclaimed share or unpaid dividend account to the IEPF can claim refunds from the IEPF Authority. 

Share Certificates

A company must issue share certificates to the people who purchase its shares. The share certificate shows that the person named in that certificate is the owner of company shares. Any share certificates issued to shareholders or changes in the company’s shareholding structure must be intimated to the Registrar of Companies.

Once the company is incorporated, it needs to issue the share certificates to the shareholders within two months of the incorporation date. When additional shares are allotted to the existing or new shareholders, the share certificates should be issued within two months of the allotment date. 

Meetings

All companies must conduct an Annual General Meeting (AGM) to make decisions on a company’s financial and administrative matters. The Board of Directors proposes resolutions to be decided in the meeting. Once a resolution receives the required number of votes from the company’s members, the resolution will be passed. 

The approved resolutions should be filed with the Registrar of Companies. Additionally, the Board of Directors must send meeting notices to members before the required days, ensure the meeting quorum is met, and record the minutes of the meeting as they are to be maintained as per the Companies Act, 2013.

Business Closing

When a partnership firm, LLP, or company decides to close or goes into liquidation, it needs to follow the prescribed legal process to distribute its assets and liabilities amongst its members and settle debts. The winding up or dissolution of a company, LLP or partnership firm must be filed before the Registrar of Companies or Registrar of Partnership, respectively.

Thus, a business owner has to take care of various operations and departments of the business. The law under which the business is registered prescribes the process and compliances to be followed in conducting the business. 

Business owners must also follow the prescribed compliances under other laws applicable to the business, depending on its nature, such as the EPF Act, ESI Act, Food Safety and Standards Act, Income Tax Act, GST law, etc., to ensure that the business is running smoothly without any hassles.