The act of legal compliance plays a major role in every business whether it is a large multi-national corporation or a small local business. With the failure to comply with the rules, regulations, policies and living up to the standard set, come serious consequences. For this, every business and company needs to plan out, strategize, manage, organize, and control the various business activities and transactions.
There are multiple forms of business and legal compliances for each one of them is mandatory. Although, the number of compliances and their implications differ in different types of business. An overview of Annual Compliance will walk you through all the important aspects of Annual Compliances.
Some of the many forms of Business Organizations are;
- – Sole Proprietorship
- – Partnership Firm
- – Limited Liability Partnership (LLP)
- – One Person Company (OPC)
- – Private Company
- – Public Company
Why is Legal Compliance necessary for all business entities?
For every company and business, legal compliance is of prime importance. In the absence of legal governance risk and compliance, there is every possibility of being sued in expensive litigation. It also comes with accompanying unpredictable damage to the reputation of the company and its business. With proper and effective management of compliances, one can avoid these risks.
An Overview of Annual Compliance Of Sole Proprietorship & Partnership
What is Sole Proprietorship?
Sole Proprietorship is a business enterprise that is owned and controlled by one person who possesses the entire authority & responsibility concerning the business. A sole proprietorship is one of the simplest and easiest forms of business entity to register and maintain in India.
What is Partnership?
A Partnership Firm is a popular form of business constitution for businesses that are owned, managed, and controlled by an association of people for profit. There are two types of Partnership firms, registered and un-registered Partnership firms. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm due to the added advantages.
Mandatory statutory compliances of a Sole Proprietorship & Partnership:
- Income Tax Filing – Every sole proprietor running a proprietorship firm has to mandatorily file an income tax return if the taxable income lies above the exemption threshold. In some cases, an audit is also required.
- GST Filing – Sole proprietorship registered under the GST has to mandatorily file GST returns monthly, quarterly, and annually.
- TDS Filing– Proprietors having TAN must file quarterly as per rules.
- ESI Return– All proprietors must be registered under ESI returns. ESI registration is required in case a proprietor employs 10 or more employees in a firm.
Important dates to keep in mind for compliances of a sole proprietorship and partnership;
DATE | PARTICULARS |
| 31ST July | For individual concern who doesn’t require their books audited (Income Tax Filing) |
| 30th September | For the individual concerned who is required to get their book audited (Income Tax Filing) |
| 30th November | In case of an assessed having an international transaction or specified domestic transaction(s). |
| 11th of every month | GSTR-1 filing (Details of Sales) |
| 20th of every month | GSTR-3B filing (Details of Sales and Purchase) |
| 31st march | GSTR-9 Audit filing |
| 7th of every month after the end of every quarter | The due date for TDS Payment through Challan for all the deductors (including govt. deductors*) |
| Last date of every quarter | Due Date for filing of Return for the financial year for all the deductors |
Mandatory Compliance for LLP (Limited Liability Partnership) under various Acts
A Limited Liability Partnership has only a few compliances to be followed every year which is amazingly low as compared to the compliance requirements placed on other corporate entities. However, the fines seem to be quite large.
DATE | FORM | PARTICULARS |
| 30th May | Form-11 | Annual Return of Limited Liability Partnership (LLP) |
| 31St July | Income Tax Return (ITR-5) | Applicable for LLPs not required to do Tax audit |
| 30th September | Income Tax Return (ITR-5) | Applicable to LLPs required to do Tax audit |
| 30th September | DIR-3 KYC | Application for KYC of Directors |
| 30Th October | Form – 8 Accounts | Statement of Account & Solvency |
| 30th November | Form – 3CEB | Applicable when entered into any international transaction or any other specified transactions. |
An Overview of Annual Compliance of the Company
Appointment of Auditor(E-form ADT-1) | * First Statutory Auditor has to be appointed within 30 days of incorporation in the first board meeting * Subsequent auditors will be appointed for 5 years in AGM. | Form ADT-1 is filed for a 5-year appointment. After that every year in AGM, the Shareholder ratifies the Auditor but there is no need to file ADT-1. |
Holding Board Meeting | * First meeting within 30 days of incorporation. * Minimum 4 meetings, one in each half calendar year. | A minimum gap of 120 days is required between 2 meetings |
Holding Annual General Meeting(AGM) | One AGM | Maximum gap of 15 months between 2 AGMs |
E- Forms Filing Requirements | E-form: MGT-7 File Annual Return within 60 days of holding of AGM for the period 1st April to 31st March. | |
| E-form: AOC-4 File Financial Statement: i.e. Balance Sheet along with Statement of Profit and Loss Account and Directors’ Report. | ||
| Form MBP- 1 Every Director of the Company in the first meeting of the Board of Directors in each Financial Year needs to disclose his interest in other entities by filling the form. | Fresh MBP-1 needs to be filed, whenever there is a change in his interest from the earlier given MBP-1. | |
| Form DIR – 8 Every Director of the Company in each Financial Year has to file with the Company disclosure of non-disqualification. | ||
Directors’ Report | Directors’ Report is to be filed covering all the information required for Small Company under Section 134. | It should be signed by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors. |
Statutory registers and books of accounts | 1) Statutory Registers 2) Minutes Book * Board Meeting Minutes Book * General Meeting Minutes Book (i.e. AGM, EGM, Postal Ballot, Creditors Meetings, Debenture holders Meetings) 3) Books of Accounts/Financial Statements (section 44aa) 4) Register of Directors Attendance at Board/Committee Meetings. | |
Circulation of Financial Statement & other relevant Docs | The company will send to the members of the Company approved Financial Statement, Directors’ Report and Auditor’s Report at least 21 clear days before the Annual General Meeting. |
Apart from the compliance mentioned above, the requirement for annual compliance differs on the type of business entity and as the threshold exceeds. Thus, it is advisable to comply with all the provisions to avoid any type of implications on the company and the officers of the company. Along with an overview of Annual Compliance, Enwisen Global Advisors can help you do that. We can take care of all your compliance needs giving you the time and flexibility to focus on other areas of your business. Get in touch with us today and let us know how we can help you.
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