Compliances for Private Limited Company (Must Know Information)

Pvt Ltd Company is an excellent business structure choice for entrepreneurs looking to gain credibility, attract investors and grow their business over time. Although the registration process is not overly complicated, many overlook the legal obligations after incorporation. This article serves as a comprehensive guide to all incorporation legal requirements that must be completed. Read more about compliances for private limited company here.

Registering with Pvt Ltd Company gives you access to key benefits. Among other things, you can add shareholders, attract the best talent with your equity, and acquire easily. From the date of incorporation of the company, it must comply with the rules and regulations of the Companies Act 2013. 

What Are the Compliances for Private Limited Company in India

A private limited company must comply with several legal requirements in order to operate in accordance with the law. Some of the key compliance requirements for a private limited company in India include.

• Incorporation: A private limited company must be incorporated in accordance with the Companies Act, 2013, and must have the required articles of association (AOA) and memorandum of association (MOA).
• Board Meetings: The company must hold at least four board meetings in a financial year and keep the minutes of the meetings.
• Annual General Meeting (AGM): The company must hold an AGM annually and must pass resolutions for the appointment of auditors, approval of the financial statements, and the declaration of dividends, among other things.
• Financial Statements: The company must prepare and file annual financial statements, including a balance sheet, profit and loss account, and cash flow statement.
• Statutory Registers: The company must maintain statutory registers, including the Register of Members, Register of Directors, Register of Charges, and Register of Debenture Holders.
• Annual Return: The company must file an annual return with the Registrar of Companies (RoC) every financial year.
• Tax Compliance: The company must comply with tax laws and regulations and must file regular tax returns and pay taxes as per the laws of the country.
• Audit: The company must have its financial statements audited by a qualified auditor if its turnover exceeds Rs 2 Crores in a financial year.
• Director Identification Number (DIN): All directors of the company must have a DIN.
• Company Seal: The company must have a common seal for affixing documents and must keep it in safe custody.

What Is Annual Compliance

Annual compliance refers to the legal and regulatory requirements that a company must meet on an annual basis in order to operate within the bounds of the law. This can include filing annual financial statements, tax returns, holding annual meetings, and fulfilling any other obligations as specified by the relevant laws and regulations.

Failure to comply with these requirements can result in legal penalties and other consequences, so it is important for companies to stay informed about their annual compliance obligations and to take them seriously.

What Is a Compliance Checklist

A compliance checklist is a list of items or tasks that a company must complete in order to ensure it is meeting all of its legal and regulatory obligations. The checklist is typically used as a tool to help ensure that all required compliance tasks are being performed in a timely and effective manner. It can include items such as filing annual financial statements, tax returns, and other reports, conducting internal audits, providing employee training, and adhering to industry-specific regulations. 

The checklist can vary in scope and complexity depending on the size and complexity of the organization, as well as the industry in which it operates. A well-designed compliance checklist is an important tool for helping companies to manage their compliance responsibilities effectively and to avoid potential legal and financial consequences of non-compliance.

Which Documents Is Required for Pvt Ltd

The following are some of the key documents that are typically required for a private limited company:

Incorporation Documents: This includes the Memorandum of Association (MOA) and Articles of Association (AOA), which outline the company’s purpose and operating rules.

PAN and TAN: PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are required for tax purposes.

Directors’ KYC: A Director Identification Number (DIN) and Know Your Customer (KYC) documents, such as identity proof and address proof, are required for each director of the company.

Bank Account: A company must have a current account in the name of the company.

Statutory Registers: Statutory registers must be maintained, including the Register of Members, Register of Directors, Register of Charges, and Register of Debenture Holders.

Financial Statements: The company must prepare and file annual financial statements, including a balance sheet, profit and loss statement, and cash flow statement.

Minutes of Meetings: Minutes of all meetings of the Board of Directors and the General Meeting must be maintained.

Tax Returns: The company must file regular tax returns and pay taxes as per the laws of the country.

What Is the Minimum Turnover for Audit

The minimum turnover for audit is determined by the laws of the country where the company is incorporated. In India, for example, as per the Companies Act, 2013, a private limited company with a turnover of less than Rs.2 crores in the financial year is exempt from getting its accounts audited. 

However, the company must still prepare financial statements and have them reviewed by a chartered accountant. On the other hand, if a company’s turnover exceeds Rs.2 crores, it is required to get its accounts audited by a chartered accountant.

FAQ: Compliances for Private Limited Company

Is an annual report mandatory for private companies?

Both public and private companies are required to provide annual reports to shareholders and other stakeholders. This can assist the decision-making process by providing information about the company’s financial performance.

Is AGM compulsory for a private company?

In many countries, including India, private limited companies are required to hold an AGM annually. The AGM is an opportunity for the company’s shareholders to review its financial performance, approve the annual financial statements, and make decisions about important company matters. 

Is audit compulsory for private limited companies?

In India, private limited companies with a certain level of turnover or revenue are required to have their financial statements audited by a qualified auditor. The purpose of the audit is to provide independent assurance that the financial statements are accurate and free from material misstatements.

Conclusion

Now you got to know about compliances for private limited company. All companies registered in India such as limited liability companies, sole proprietorships, and section 8 companies are required to maintain annual compliance such as Annual Returns and Income Tax Return each year.it must comply with the rules and regulations of the Companies Act 2013. 

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