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.
Compliances for Startups under Companies Act 2013?
- Annual General Meeting (AGM): There should be one AGM every year and there must be a maximum gap of 15 months between 2 AGMs. Approval of financial statements, declaration of dividends, the appointment of auditors, etc. are the principal objective for this meeting. The annual general meeting needs to be held in the city where the registered office of the company is located.
- Board Meetings: The first board meeting of the Board of Directors should be held within 30 days of the incorporation of the company. There should be a minimum of two meetings one in each half calendar year. Plus, there should be a gap of at least 90 days between two meetings. Apart from that, four board meetings are supposed to be held every financial year such that the gap between two consecutive board meetings isn’t more than 120 days. ·
- Appointment of Auditor (E-Form ADT-1): The first Statutory Auditor is supposed to be appointed within 30 days of the company’s incorporation in the first board meeting. However, the subsequent auditors could be appointed for 5 years in AGM. Being an applicant, you need to file form ADT-1 for a 5-year appointment. After that, shareholder endorses the auditor every year in AGM, but there’s no need to file ADT-1. ·
- File e-Form MGT-7 : MGT-7 is an electronic form issued by the Ministry of Corporate Affairs (MCA) to all the companies to fill their annual return details. The Registrar of Companies (ROC) maintains this form via electronic mode and on the basis of the statement of accuracy provided by the company. Every company registered as the private limited company must file the form MGT-7 every year. ·
- File e-Form AOC-4 : Form AOC-4 is meant for filing the financial statements for each financial year with the Registrar of Companies. Generally, the main means of communication between the shareholders and the Board of Directors is through the financial statements. Hence, every company registered under the Companies Act, 2013 is supposed to file the form AOC-4. ·
- Filing Directors’ Report: As per the provisions of the Companies Act, 2013 every company needs to prepare a board report in which details of the state of the company, operations during the year, dividend declaration, net profit, and its compliance with a set of financial, accounting, and corporate social responsibility standards contain. In a nutshell, Directors’ Report should be filed covering all the details required for Small Company under Section 134. The report must be signed by the chairperson authorized by the board, where he/she isn’t so authorized by at least 2 Directors. ·
- Form MBP-1: The form MBP-1 needs to be filed by every director of the company in the first meeting of the Board of Director in every financial year where they would disclose their interest in other entities. Fresh MBP-1 must be filed, whenever there’s a change in the director’s interest from the earlier given MBP-1. ·
- Form DIR-8: Every director of the organization in every financial year must file form DIR-8 with the Company Disclosure of non-disqualification. ·
Statutory registers and Books of Accounts There are certain registers that are mandatory to maintain. They are:
- Minutes book; Board meeting minutes book, and General meeting minutes book that could be EGM, AGM, Creditors Meetings, Debenture holders Meetings, and Postal Ballot.
- Statutory Registers;
- Books of Accounts or Financial Statements (as per Section 44aa)
- Register of Directors Attendance at Committee or Board meetings. ·
Circulation of Financial Statement and other relevant docs: The company will send the Financial Statement, Director’s Report, and Auditors’ report to the members of the company at least 21 clear days before the Annual General Meeting.
Essential GST Compliances for Startup
All the taxpayers registered under Goods and Services Tax (GST) laws have to file GST returns monthly and quarterly except those following in the below-described categories:
- Composition dealer;
- Input Service Distributor (ISD);
- Exporters exempted from tax;
- Small taxpayers whose turnover is up to Rs. 5 crores in the last financial year;
- Non-Resident Registered person (NRI);
- The person responsible for deducting or collecting tax under CGST Act.
Vital TDS compliances for Startup: TDS means the tax deducted at the source. As per the provisions of the Income Tax Act in India, filing TDS returns is obligatory. Additionally, the assessee who has deducted the tax at the source must file the returns quarterly by producing TDS along with details such as PAN, TAN, payment type, deduction amount, etc.
Filing of Income Tax Returns (ITR) where the payable tax would be at a flat rate of 22% plus Education Cess.
What are the additional compliances?
Apart from the above-described compliances, the newly-registered businesses are also supposed to comply with the compliances as follow:
- Assessment of advance tax liability and payment of the advance tax should be done periodically.
- Filing of Tax Audit Report. Regulatory Assessment of business under different acts of law that could be Environment and Protection Act, Competition Act, Factory Act, Money Laundering Act, etc.
Any Query Related to Startup
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