Whether you are the owner of a small business or a large corporation, you must file your returns within the stipulated time frame. If you try to escape this task, you may be fined heavily or may even be blacklisted by the Registrar.
At the end of every financial year, all businesses are required to do their annual return filing. Small and large businesses must follow the same procedure. While many smaller businesses skip this step entirely, it is not advisable as it can result in heavy fines from the Registrar and may even result in the blacklisting of the company’s directors.
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So now let’s keep in mind the following compliance steps which must be taken by every private limited company:
Maintain Books of Accounts – Annual Return Filing
The Companies Act, of 2013, makes it mandatory for companies to maintain the books of accounts in a specific format. Moreover, it is also necessary for companies to maintain the books of accounts to have adequate oversight and control over the business.
While doing so, Filing tax returns, making projections for the business, filing goods and services (GST) returns and even filing TDS returns need to be undertaken.
All company accounts must hold the following information:
- A detailed summary of all money received and spent by the company;
- An account of all sales and purchases;
- A summary of current assets and liabilities;
- Any other financial transactions, such as payment of salaries.
Appointing an Auditor – Annual Return Filing
There are certain compliances all new companies must fulfill. An essential requirement for successful adherence to these compliances is the appointment of a first auditor. Every company has to appoint its first auditor within a month of the company’s registration.
Any person who is a qualified Chartered accountant (CA) or a firm of CAs can be appointed as the auditor of a private limited company. The term of an auditor’s appointment ends at the conclusion of the company’s first annual general meeting (AGM). The company may reappoint the same auditor.
The following persons/entities cannot be appointed as the auditor of a private limited company:
- a) A corporate body
- b) An officer or employee of the company
- c) A person who is a partner or director of the company
- d) A person who is indebted to the company
- e) A person who is engaged in full-time employment elsewhere
When auditors complete their work, they write an audit report in which they explain what they did and provide an opinion based on their findings. The purpose of the auditor is to ensure that the information presented in the financial report, as a whole, accurately reflects the organization’s financial position in a given year. While reviewing the financial report, auditors must adhere to auditing standards mandated by the government of India.
Conducting Annual General Meetings
The Companies Act of 2013: https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf requires that all companies, with the exception of a one-person company, must hold an annual general meeting (AGM) year after year. An annual general meeting (AGM) is the mandatory annual gathering of a company’s participating shareholders.
The company’s directors present an annual report to shareholders at the AGM, which includes information about the company’s performance and competitive strategy.
Furthermore, shareholders with voting rights vote on current issues such as the board of director appointments, executive compensation, dividend payments, and auditor selection.
Filing of Annual Returns
Once the AGM is complete and the audited financial statements are adopted by the company, the returns must be filed with the Registrar. The filing of the audited financial statements in the format prescribed by the Ministry of Corporate Affairs is called the filing of the annual returns of a company. These returns must be filed within 60 days of the AGM date.
The Takeaway
It is mandatory to maintain the books of accounts in a systematic manner. Account keeping is essential to present the various types of transactions that happened in a financial year. Your company should maintain a detailed summary of the money spent and received by the company. Get in touch with the experts at Vakilsearch and enjoy the benefits of hassle-free and seamless return filing. Explore a broad range of compliance services and packages, get in touch with the experts at Vakilsearch today!
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