Annual Compliance for Startups – A business that operates as a private limited company must adhere to all the variety of regulations set forth by numerous statutes and regulatory agencies. This includes, but is not limited to, filing tax and other returns regularly, holding board and other meetings, keeping statutory books and accounts, and so on.
14th February, 2022
MCA has granted extension for filing e-forms like AOC-4, AOC-4 (CFS). AOC-4 XBRL and even AOC-4 non-XBRL up to 15th March 2022 and for filing the e-forms MGT-7/MGT-7A up to 31st March 2022
8th December, 2021
In the past, MCA has granted permission to companies to conduct their AGM and EGM through the video conferencing or via other audio-visual means (QAVM) or transact items through postal ballot up to 30th June 2022.
Do find below a total overview of the documentation and the requisite formalities that needs to be observed and become tax and law compliant even for the Annual Compliance for Start-up Company as well. The non- compliance can attract the penalties and may also bring an end to the business in extreme cases as well.
The following checklist is for private limited businesses, particularly small enterprises with paid-up capital of up to Rs.2 crore or annual turnover of less than Rs.20 crore in the previous year.
The Annual Compliance for Startup Company can be categorized as follows:
- Registrar Related Compliance
- Non-Registrar related Compliance
#1 Registrate Related Compliances
|APPOITMENT OF AUDITOR|
(e-FORM ADT- 1)
|Within 30 days, the first auditor has to be appointed. The shareholders must, however, confirm the appointment at the company’s first annual general meeting (AGM) and file Form ADT-1.||The appointment of the auditor must be made on Form ADT-1, which must be approved by the shareholders at the first AGM. Within 15 days following the AGM, it must be filed.|
|HOLDING BOARD MEETING||First meeting has to be conducted within 30 days||A minimum of 120 days must pass between the two consecutive meetings.|
|HOLDING ANNUAL GENERAL MEETING (AGM)||The first AGM must be held within 9 months of the end of the first financial year. From that, the AGM must be held every year within six months of the financial year’s end.||A maximum of 15 months must pass between two AGMs.|
|E-Forms FILLING REQUIREMENTS||E- Form: INC-20A (Declaration and Commencement of Business)||Form INC-20A is a declaration for the start of a business that must be filed within 180 days of the company’s incorporation date.|
|E-Form: AOC-4(Financial Statements)||Within 30 days of the AGM, financial statements, including the Balance Sheet, Statement of Profit and Loss Account, and Directors’ Report, must be filed.|
|E- Form: MGT-7A (Annual Returns for Small Company/OPC)||Annual Returns need to be filled within the exact 60 days of the AGM.|
|E- Form: DIR-12 (Appointment/Resignation of the Directors)||In 30 days of appointment/resignation, the details of the directors’ appointment/resignation, as well as their consent to act as directors/Resignation Letters, must be filed.|
|E- Form: 3KYC (Director KYC Submission)||Every year, by the 30th of September, every Director of the Company must complete KYC whose DIN was assigned on or before 31 March.|
|E- Form: MGT 14 (Filling of Resolution with MCA)||The specifics of the reinforced at board meetings should be filed within 30 days of the day they were passed.|
|E- Form: DPT-3 (Return of Deposits)||Every year, by the 30th of June, the company must file this return, which contains information regarding deposits and/or outstanding receipts of loans or money other than deposits.|
|Maintaining of Statutory Registers and Books of accounts||Statutory Registers, such as the Register of Members/ Directors and KMP/ Shareholders/ Beneficial Owners/ Loans, Contracts and Arrangements/ Deposits/ Related Parties Transactions, and so forth; Minutes Book of Board Meeting/ AGM/ Other Meeting: Books of Accounts; ROC Files; Financial Statements, etc., need to be maintained and regularly updated.|
|DIRECTOR’S REPORT||Abridged Directors’ Reports providing all information required for Small Companies under Section 134 must be filed.|
|CIRCULATION OF FINANCIAL STATEMENTS AND ALL OTHER RELEVANT DOCS||At least 21 clear days before the Annual General Meeting (AGM), the company should send approved Financial Statements, along with shortened Directors’ Report and Auditor’s Report, to the members.|
KEY TAKE AWAY
Remember that the above-mentioned Annual Compliance for Startups is mandatory. Except for all the above compliances, there may be event-based compliance even for the small company.
Here the other statutory compliances of such private limited companies revolve around the periodic filing of the tax and all other returns, maintenance of book(bookkeeping) under the Income-tax Act, and all other statuses, as required to mention.
The compliance requirement varies depending on the nature of the firm, the product or service given, net worth, borrowings, turnover volume, and other factors.
#2 Non-Registrar Related Compliance
- the payment of periodic dies (GST Liability, TDS, TCS payment, Advance tax, and Ptax-Profession tax
- the filing of Periodic returns –
- monthly/quarterly/annual GST Returns
- Quarterly TDS Returns
- assessment of advance tax liability
- filing of Income Tax Returns (ITR)
- filing of Tax audit report
- filing of PF Returns
- filing of half-yearly ESIC returns
- filing of profession tax (Ptax) returns
- the Regulatory assessment and reporting under the different acts of Law like
- Environment and Protection Act, Competition Act, Factory Act, etc.
When people do not have a professional assistance from the Chartered Accountant Firm, many times the entrepreneurs become overwhelmed by the number of compliances and wind up paying hefty fines.