Though, private limited firms are most famous way to start a business as there are different compliances that are needed to be followed when your company is incorporated. Handling day to day work and operations of the business with complying corporate laws is full of stress and can be slight taxing for any budding entrepreneur. Therefore, it’s important to take assistance of experts and professionals who will make you understand various legal needs to make sure that you fulfill compliances on time without any penalty or interest. Here are some elaborated points of the usual compliances that private limited firm has to ensure and that is obligatory:
- As soon as thirty days are about to over the board of directors of private limited firm hold a first meeting. The meeting is to be held within thirty days from the incorporation date of the firm.
- It is to be taken care of that minimum 4 board meetings should be held according to the calendar such as 1 meeting in every three months. When you own a private limited firm then it’s quite important to hold a meeting in every two months like twice in a year, this is mainly for small scale businesses.
- Many starts up firms come under the small company category.
- Minimum two directors and 1/3rd of the whole amount of directors, whosoever is greater are usually needed to be present in the meeting of board of directors. All discussions need to be recorded and drafted as well as maintained at registered office.
- Directors should be wretched about the purpose and date of the meetings by giving a note at least seven days beforehand from the meeting date.
Yearly general meeting:
Each private limited firm is needed to hold meetings of its shareholder once in every year at a given period of time that is 6 months from the closing date of financial year.
The main agenda of AGM includes endorsement of economic statements, appointments of auditors and their re-appointments, declaration of dividend, and payment of directors and so forth.
The yearly usual meeting is to be held in the business hours. The meeting should be held on normal week days and make sure there is no public holidays as well as shall take place only at the registered offices of the firms or at some place within the city, village or town in that the registered offices of the firms are located.
As a part of the annual filings, the company should fill following forms with ROC:
- Form 23ACA: this is to fill loss and profit account by all firms.
- Form 23AC: this one if for filing the Balance Sheets by all firms.
- Form 66: this one is for filing CC or Compliance Certificate by the firms.
- Form 20B: this is for filing yearly Return by firms having contributed to capital.
- Form 66, 23ACA, 23AC is filed within thirty days from the date of yearly usual meeting. Form 20B is to be filed within sixty days from the date of yearly broad meeting.
Statutory audits or Legal audit:
The main purpose behind the legal audit or statutory audits is same as the logic behind other audits. It is mainly to determine if a business is offering an accurate and fair representation of the financial positions by examining data like book keeping records, financial transactions, bank balances and others.
- Appointments of legal auditors in the firm
- Finalize yearly accounts with auditors of the firms
Income tax compliances:
- Quarterly and calculation payment of the advance tax
- Filing for the income tax return where taxes will be accountable at flat rate of thirty percent and education Cess.
- Tax audit is obligatory in turnover, gross receipts and case sakes of business exceed above one crore Rs in the early year relevant to assessment year.
- Filing of excise audit reports
Maintenance of the statutory records and registers:
Private limited firm has to maintain different statutory records and registers as needed by the firm law like registration of members, registration of shares and registration of directors. Apart from this, incorporation document of the firm, resolution of the meeting of the board of members, minutes of board meetings as well as yearly general meetings etc are also needed to be secured by the firms. These records should be kept safely at the registered workplace of the firm as well as should be open for the inspection of the members at the time of business hours. The account books of each firm relating to at least 8 years of financial years period should be secured and reserved in first-class condition.
Compliance by the directors:
Each director of the firm has to disclose his directorship to other firms every year. It is done in written and declaring to the firm annually in a particular format.
Various other events based filings:
Apart from yearly filings, different other compliances are to be made as well as while any event take place in the firm, for instance these events are like:
- Allotment of latest shares and transfer of share
- Change in paid up or authorized capital of the firm
- Providing loans to different firms
- Providing loans to the directors
- Loans to various directors
- Appointments of managing and whole time directors as well as payments of remunerations
- Closing or opening of bank account or transformation in participants of bank accounts.
- Change in the statutory auditor or appointment of the same in the firm.
Various forms are needed to be cased along with the registrars for all these events within particular time period. In case, this is not done then additional penalty or fees is levied. Therefore, it’s important that various compliances are done on time.
In case firm fails to meet these regulations and rules of the firms act, then firm and every director who is at fault will be punished with a fine or penalty.