Things to know about Annual Compliance of a Private Limited Com

  • Annual Compliance is one of the biggest responsibilities for smoother functioning of a Private Limited company. It is always preferred that these compliances require to be followed diligently to avoid any penalties and fines in the future.

    In this Blog, we will discuss various aspects of Annual Compliance of a Private Limited Company. Here we will cover the topics which include:

    1. i) What is the meaning of Annual Compliance?
    2. ii) What are the essential aspects of Annual Compliance of a Private Limited Company?

    iii) Benefits of Annual Compliance of a Private Limited Company

    1. iv) Documents required for Annual Compliance of a Private Limited Company
    2. v) Fee for Annual Compliance of a Private Limited Company

    Let's explore the ideas and knowledge about the Annual Compliance of a Private Limited Company

    1. i) What is the meaning of Annual Compliance?

    In general terms, Annual compliance means the filing of annual return and financial statements with the Ministry of Corporate Affairs for every financial year as prescribed under Companies Act, 2013. As per the Companies Act,2013 and the Corporate laws, every year all companies are supposed to perform certain legal formalities which are collectively known as Annual Compliance. Annual Compliance is mandatory for every private limited company, One person company, Limited company.

    1. ii) What are the essential aspects of Annual Compliance of a Private Limited Company?

    There are various essential aspects of Annual Compliance of a Private Limited Company and some of them are discussed below.

    1) Maintenance of Books of account - Business Entities are required to update and furnish all their books of accounts pertaining to their financial transactions for the purpose of the audit. These include all vouchers, legal deeds, registers, cash books and other testimonial related to the transactions of the company.

    2) Preparation of Financial Statements - Directors of a private limited company is supposed to furnish their furnish their financial Statements pertaining to their financial position at the end of the fiscal year. These include eStatement of Profit and loss, Balance sheet, Cash flow statement.

    3) Filling of Income tax return (ITR) - All the companies registered under the Companies Act, 2013 must file the Income Tax return latest by 30 the September of every year.

    4) Filling of annual returns - Every private limited company is required to file its annual return within 60 days of holding its annual general meeting. Annual return shall be filed for the period of the relevant financial year (1st April-31st)

    5) Holding an annual general meeting of the company -  Every private limited company needs to hold its annual general meeting in every year. Private Limited Companies are required to hold an annual general meeting within 6 months from the close of every financial year.

    6) Preparation of director's report - All the private companies needs to prepare the director's report.

    7) Maintenance of Statutory register and minutes book  - Private Limited companies have to maintain a certain official and financial record in the form of Statutory Registers. Private Companies are mandatorily required to maintain various registers such as the register of shares, Register of Members, Register of Directors.

    iii) Benefits of Annual Compliance of a Private Limited Company

    The list of benefits of annual compliance is given below:

     1) Raising the company's credibility

     2)Attract investors

     3) Maintain active status and avoid penalties

    4) It protects individual assets and income

    5) Avoidance of Criminal charges.

    1. iv) Documents required for Annual Compliance of a Private Limited Company

    A number of documents required for annual compliance of a Private Limited Company and  list of the documents is given below:

    1) Incorporation document such as PAN Card, Certificate of Incorporation, MOA, AOA of a private limited company

    2) Audited Financial Statements

    3) Audit Report and Board Report

    4) Digital Signature Certificate of Director

     

    1. v) Fee for Annual Compliance of a Private Limited Company

    The Government fee required for annual compliance of a private limited company varies with the share capital and starts from Rs.2,000. The professional fee starts from Rs. 8,000. However, there is a provision of additional government fee in case of delay in filing an annual return.

    Conclusion

    Annual Compliance is mandatory for every private limited company, One person company, Limited company.

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