Once you register a private limited company, you must meet the basic compliance requirements to guarantee the smooth operations of your business. In this article, we will elaborate on the accounting and auditing guidelines prescribed by the MCA.
Despite the size or nature of a business, every Pvt Ltd Company must get its accounts audited by chartered accountants before the end of the financial year. This task of ensuring compliance also includes the selection of an auditor. The auditor must assess the records of the business and produce the audit report and the audited financial reports which they must also furnish to the Registrar of Companies.
We have outlined below the way in which private limited company performs certain compliances:
Appointment of Auditor in Pvt ltd company
An auditor must be assigned for five years via form ADT-1. The initial Auditor must be named within one month from the date of incorporation of the company.
Statutory Audit of Accounts
Every corporation must compulsorily prepare its accounts and get them reviewed by a chartered accountant towards the end of the fiscal year. The auditor must prepare the audit report and the assessed financial statements and also document them with the Registrar.
Filing of Annual Return (Form MGT-7)
All private limited companies are compulsorily required to document their annual return within 60 days of organising the annual general meeting (AGM). Yearly return spans the period from 1st of April to 31st March.
Documenting of Financial Statements (Form AOC-4)
The organisation must record its balance sheet alongside the declaration of profit and loss account and the director report in Form AOC-4 within 30 days of conducting the AGM.
Organising Annual General Meeting
Each pvt ltd company must organise an AGM every scheduled year. All organisations are required to hold their AGM within six months before the financial year ends.
Arranging Directors’ Report
Directors’ Reports must be set up with a notice of all the data required under Section 134.
Annual RoC Filings for Pvt ltd company
It is obligatory for private limited companies to file annual accounts and returns with details of their executives, shareholders, and so on with the Registrar of Companies. Such compliances are to be made once a year. As a part of the annual filing, the accompanying forms are to be documented with the RoC:
- Form MGT-7 (Annual Return): All private limited companies must compulsorily file their annual returns within 60 days of having the annual general meeting. yearly return will be for the time frame 1st April to 31st March.
- Form AOC-4 (Financial Statements): All private limited companies must compulsorily provide details of the Profit and Loss Account and Director Report in form AOC-4 within 30 days of having the annual general meeting.
A Director’s report is a financial document that needs to be filed before the financial year ends. If applicable directors need to reveal details of their position as directors in different organisations as well. Moreover, all other relevant details must be submitted in hard copy in a precise director’s report.
Income Tax Compliances
The following is the required income tax compliances that must be adhered to:
- Computation and quarterly payment of advance tax are a must
- Documentation of income tax returns (tax has to be paid at a rate of 30% in addition to cess)
- Tax audit (compulsory if business turnover or gross revenue of a business surpasses ₹1 crore in the year prior to the evaluation year.)
- Tax audit report filing is also a necessary requirement
Maintenance of Statutory Registers and Records
A Pvt ltd company needs to keep up different statutory registers and records as required by the company law, for example, register of shares, register of directors, register of members and so forth. Besides, merger documents of the company, resolutions of the meetings of the board of directors, minutes of the board meetings, and annual general meetings, etc are also required to be preserved by the company.
Such records are to be kept at the registered office and they must be available for scrutiny by its members during business hours. Additionally, the books of account of the organisation of at least the last eight fiscal years ought to be safeguarded and maintained.
If a company does not adhere to the standards and guidelines of the Companies Act, at that point the company and each official who is in default will be culpable. They can be sentenced to pay a fine and be imprisoned. In case there is a delay in any filing, penalties may be levied by the MCA: https://www.mca.gov.in/content/mca/global/en/home.html
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