Annual Compliance is a very important part of running your business smoothly and for maintaining its legal identity. These compliances need to filed by a Private Limited Company on a regular basis with the Ministry of Corporate Affairs. Failing to file such compliances may result in red flagging by the MCA.
Compliance for Private Limited Company need to be filed in either of the two ways- Annual Compliance and Event Based Compliance. The annual compliance are broader and contain several other types within it. You may also be required to fulfill self-compliance, one-time compliance, quarterly compliance along with maintaining the statutory records and registers.
Common Compliance to be filed by a Private Limited Company include:
Profit and Loss Statement
Income Tax Returns
MOM (Minutes of Meeting)
WHY IS ANNUAL COMPLIANCE FILING IMPORTANT?
While it is mandatory to file the annual compliance, you should not see it as a burden. There are many benefits of remaining compliant, such as:
Maintains the Legal Identity of the Company
Establishes better relationship with the stakeholders
Reduces the risk at an organizational level
Enables transparent business functions
Helps in Employee Retention as it overall works in their benefit
Leads to better productivity
Brings a good name for the company in the market
HOW TO DOCUMENT ANNUAL COMPLIANCE OF A COMPANY?
As said above, annual compliance have to submitted at regular intervals and thus they have to maintained properly throughout the year. Given below are a few details about it.
When you start a business, you should ensure that there is a board outside your registered office that contains the name and address of your company in its regional language as well as in English. The website of your company must have the name of the company, registered office address, Corporate Identity Number, e-mail address and the name of a contact person in case of grievances. Every letterhead and invoice of the company should also contain the above information.
To start the annual compliance process, you need to do four main things- appoint the first auditor of your company, obtain statutory minutes’ binders, prepare and print the share certificates and prepare the statutory registers for the company.
Every 90 days after the start of the compliance process, you are required to draft the notice for a board meeting, hold the meeting and then prepare the minutes of the meeting. The company is also required to prepare a sheet showing the attendees of the said board meeting.
Though annual compliance include several documents, here we are mentioning some of the annual compliance’s documents:
Financials of the company- P&L Statement and Balance Sheet
Annual Return and Board’s Report for annual compliance of the company
Director’s Declaration and Disclosure of Interests
Minutes of the Annual General Meeting
AOC 4, ADT 1 and MGT 7
Statutory Audit Report
Income Tax Returns of the Company with DSC
Advance Tax and Tax Audit Report