Background: Once a private limited company is registered, it is imperative to fulfill the compliance requirements to guarantee smooth operations of the business. In their previous article, Vakilsearch shared how to apply for GST refund on GST portal. Here they explain what are the accounting and auditing guidelines that are mandatory for private limited companies as set by the Ministry of Corporate Affairs (MCA).

Despite the size or nature of the business, every private limited company must get its accounts audited by chartered accountants before the end of the financial year and this procedure of accomplishing the compliances likewise includes the selection of an auditor. The auditor will assess the records and produce audit report and audited fiscal reports which they will document with the registrar of companies.

We have explained beneath a portion of the regular compliances which a private limited company needs to compulsorily follow:

1. Appointment of auditor: Auditor will be assigned for five years and form ADT-1 will be filed. The initial auditor will be named within one month from the date of incorporation of the company. 
   
   
2. Statutory audit of accounts: Every corporation will arrange its accounts and get the equivalent reviewed by a Chartered Accountant toward the end of the fiscal year compulsorily. The auditor will give an audit report and the assessed financial statements to document it with the registrar.
   
   
3. Filing of annual return (Form MGT-7): All private limited companies are compulsorily required to document their annual return within 60 days of organising of the annual general meeting (AGM). Yearly return will be for the period from 1st of April to 31st March.
   
   
4. Documenting of financial statements (Form AOC-4): The organisation must record its balance sheet alongside declaration of profit and loss account and director report in this form within 30 days of conducting the AGM. 
   
   
5. Organising annual general meeting: Each private limited company must organise an AGM in each scheduled year. Organisations are required to hold their AGM within six months before the financial year ends. 
   
   
6. Arranging Directors’ Report: Directors’ Report will be set up with a notice of all the data required under section 134.
   
   

Also read: Mandatory compliances for a Private Limited Company in India

Annual ROC filings

It is obligatory for private limited companies to file annual accounts and returns with details of the executives, shareholders and so on to the Registrar of Companies (ROC). Such compliances are necessary to be made once a year. As a part of the annual filing, the accompanying forms are to be documented alongside the ROC:

• Form MGT-7 (annual return): All private limited companies must compulsorily file their annual returns within 60 days of having 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, loss account and director report in AOC-4 form within 30 days of having annual general meeting.
  
  

Directors’ Report

A Director’s Report is a financial document which needs to be filed before the financial year ends. All directors need to reveal details of their position as director in different organisations. And all other details must be submitted in hard copy in a precise director’s report. 

Also read: Checklist of mandatory information to include in Director's Report

Income tax compliances

• Computation and quarterly payment of advance tax
• Documenting income tax returns (Tax has to be paid at a rate of 30% in addition to education cess)
• Tax Audit – Compulsory if business, turnover or gross revenue of a business surpasses 1 crore rupees in the earlier year applicable to the evaluation year.
• Tax audit report filing
  
  

Maintenance of statutory registers and records

A private limited 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 meeting, etc are also required to be preserved by the company.

Such records are to be kept at the registered office, and it will be open for scrutiny to its members during business hours. Additionally, the books of account of each organisation identifying with a time of at least eight fiscal years ought to be safeguarded and maintained in great control.

Non-compliance

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 with a fine for the period for which default proceeds. In case there is a delay in any filing, penalties may be levied by the MCA.

Also read: 10 legal tips to safeguard your business interests this new year

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