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What are annual compliances for private limited company?

Running a business of your own is not any cake walk. If you are planning to start a company of your own then all you need to have ready with you are, lots of patience, dedication towards your work, punctuality, and updated business law knowledge. All these cannot come with experience; you have to seek some professional guidance of practicing Chartered accountant and auditors. All these are easy steps to be followed one by one. Let us dive deeper to know all about private company business and the annual compliances they have to follow for existing in the competitive market.

Any private limited company has to file and register their company’s accounting details, tax returns, performance growth, and other tax returns including the detailed information of their stakeholders, directors, and employers to the registrar of the company. All things look the same as we saw in movies, and television shows but the only difference is nothing seems to be such careless and fast procedures. In reality, you have to face board meetings at least once in a year followed by other general meetings on quarterly basis. These meetings comply with reporting your business performance, plans, and approval of financial declarations.

List of some private limited company compliances for a clear picture of what actually compliances comply to:

  • Board Meetings: Minimum 4 board meetings are important to be held followed by, some other meetings on quarterly basis. The invitation to meeting must be sent to all the directors. The annual compliances for private limited company must be held under the presence of all the directors. The meeting time and outcome results must be recorded and reported to the registered office.
  • Annual General Meetings: The audit requirement for private limited company falls under this compliance. Under this meeting, the company has to appoint a practicing Chartered accountant or auditor who can take care of the financial performance and keep track of investments and profitable outcomes of the company. Apart from this, AGM also includes declaration of dividends and shareholder’s financial statements. The meeting must take place at the registered office.
  • Annual Filing of forms: This meeting is conducted for filing all financial credentials of stakeholders, directors, financials, etc., the forms are verified and certified by the appointed chartered accountant or the company’s Secretary.
  • Minutes Books maintenance: A record file that has all the details regarding director’s registration, Contract’s registration, member registration, etc. are needed to be filed and kept in registered office for future reference.
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Income tax compliance for private limited company

A private limited company is identified as a company that has minimum share capital of 1 crore and 50 crore turnover. With such amount, income tax compliance for private limited company falls under the hands of practicing auditor of the company. The board meetings and annual general meetings also discuss this part for any entity changes. The board Directors can file the form if they are having a change of mind for the entities.

Irrespective of the size of the company, the income tax returns is mandatory for every year. If a company doesn’t follow the compliance law then there are penal provisions for such companies and that can be a real mess as far your company’s reputation is concerned.

If your company has just been incorporated then you can hold your annual general meetings and conduct it after eighteen months of incorporation. In all the subsequent years, if the company fails to have the AGM then the penal provisions have the right to fine Rs 5000 from every board directors and members.

Annual Compliance Checklist for private limited company

Here is the full checklist of annual compliances for private limited company that are mandatory to be followed up by all the directors, auditors, and financial experts serving the company, as per the Government norms:

1) Receipt of MBP-1: In this form, the directors of the company in every board of director’s meeting have to disclose their other entities interest in. it is mandatory to submit the new MBP-1 form each time when the director have a change of interest in their entities. A renewal form is meant to be submitted in every board meetings.

2) Receipt of DIR-8: In each financial year, every director of the company will have to file the company disclosure of non-qualification.

3) E-forms filling Requirements: Under this act, the company has to file their company’s balance sheet detailing all the profit and loss accounts. They are needed to be balanced and filed with Director’s report. Other than this, the financial statement, auditor’s report, cash flow statement, notice of AGM, and so on are also given special attention

4) E-forms filing requirements: If your company’s share capital is 10 crore or more then 50 crore turn over, it should be certified by the company’s secretary in practice.

5) Circulation of financial statement and relevant documents: Under this act, the company will send all the certified documents and approved financial statement including the cash flow statement and auditors report.

6) Notice AGM: All the points recorded, registered, and certified in Annual General Meeting are prepared under the section-101 and secretarial standard-II

7) Sending of Notice of AGM: The notice prepared under above mentioned sections are then passed on to the Directors, members, and statutory auditor.

8)  Board Meetings: All the annual compliances for private limited company must be held once in every year and all the board meetings must be held in such a way that the gap between two consecutive meetings should not be more than 120 days. The company must help at least 1 board meetings on quarterly basis.

9) Appointment of Auditor: An auditor for the company will be appointed for 5 years and a form ADT-1 should be filed for 5-year appointment after which, every year the company shareholder will ratify the auditor without filing the ADT-1 again.

10) Register’s maintenance: The Company will keep the records of directors, shareholders, members, and auditors under this act.

11) Annual Return: All the annual return of companies, including the small-scale company has to be signed by the practicing company secretary.

Mandatory Compliances for a Private Limited Company

Above mentioned all the annual compliances are the mandatory annual compliances for private limited company. Aside these eleven compliances, many companies also have event-based income tax compliance for private limited company.

Although there are compliances to be undertaken, once your company gets incorporated but there are some mandatory private limited company compliances that must be undergone by every small and large-scale company. Let us go through them:

1) Appointment of the auditor: An audit requirement for private limited company is for 5 years to look after the financial proceedings of your company and keep a track record of your investment, profit, and loss statements.

2) Statutory audits of account: The statutory audit is usually held to find out whether an organization is showing the correct financial position by checking their bank balance, bookkeeping records, and the transactions.

3) Annual RoC filings: The private limited company has to file their income tax return and accounting details of every stakeholder and directors. This must be done at least once in a year.

4) Annual General meeting: This meeting holds the agenda of seeking approval from the directors, stakeholders, and registrars for the financial cash flow and investment records. A company has to file its annual return after 60 days of annual general meeting.

5) Income Tax Compliance: The income tax compliance is the most sensitive compliance to go through because the company has to disclose all the stakeholder and cash flow on them. The income tax compliance for private limited company is looked out by the hired auditors of the company, as they bear all the information in accounts department of the company.

6) Lastly, there are event-based compliances that can be scheduled at any time in the company and among the directors and board members, depending on the call for annual filings. These filings include:

  • A new share has been brought or invested in
  • If your company is providing loan to other companies.
  • If your company is asking for a loan from other company.
  • Loans given to the Directors.
  • Changing signatories of your company’s bank accounts.
  • Appointing a new or changing the statutory auditors in the company.
Conclusion of private limited company compliances

In a private limited company there are various pressures from all sides. The clients keep pushing you for performance enhancement, the customers demanding for the better results of their services, and there are employer’s payroll activities to be looked under. All these process creates a maddening situation for anyone who isn’t well-prepared and has a great comeback in the field.  For this comeback, you need to hire the best practicing auditor for your company who is well aware of the business traits and can contribute to your organization with passion and dedication.

Safe side of running a business and private limited company is to attend all the board meetings and AGM, conducting mandatory compliance, and appointing the auditors or ratifying them after every 5 years of their service to the company.

 

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  • I contacted them for annual compliance’s for private limited company they provide me all support at my office great company for business registration.

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