Basics for StartUps
Success of any business depends upon how the promoters have professionally planned and structured their business. If only there is a strong foundation, it’s possible to run a business successfully.
FORM OF ORGANISATION
CHOOSE RIGHT BUSINESS ENTITY The entrepreneur should select the business entity which suits best after taking into consideration 1. the nature of business 2. object of the founders 3. scale of operation 4. Degree of control desired by the owners.4. Amount of capital required .& the source of funding.
He has the option to choose from
a) Sole Proprietorship or General Partnership
suitable for small/medium scale operations covering a particular geographic area , funding their startup fully from their own funds.
Private Limited Company or a Limited Liability Partnership.
If the entrepreneur wishes to scale up the operations in future and capital is being funded partially this form of entity is advisable.
KEEP BUSINESS SEPERATE
The most common mistakes that the founders of Startups commit are to mix their personal finance with that of their business. This can result in erosion of their personal finance and also shows screwed financials for the Startups. The business should be carried out under a distinct business entity, facilitating measurability of the financial performance of the business.
ACCOUNTING OF ALL EXPENSES & REVENUE – PROPER ACCOUNTING
Startups should employ effective accounting methodology so that they account all expenses, revenues and other financial transactions of the business in order to reflect a true & fair view of the financial viability of the business. They should maintain proper books of accounts for which readymade accounting software’s such as Tally etc. can be used.
Companies and LLP’s are required to maintain books of accounts as mandated by their governing statute namely Companies Act, 2013 and Limited Liability Partnership Act, 2008. Further, Income Tax Act also casts an obligation to maintain books of accounts, irrespective of the form of business and has separate provision related to it.
The fact of Not earning revenue cannot be an excuse to non-maintenance of books. Proper maintenance of books of accounts in the year of incurring losses and filing of income tax return on due date will facilitate in setting off losses against profits in the years when profit is made.
SPECIFIC APPROVALS – BOTH CENTRAL & STATE
Startups should employ effective accounting methodology so that they account all expenses, revenues and other financial transactions of the business in order to reflect a true & fair view of the financial viability of the business. They should maintain proper books of accounts for which readymade accounting software’s such as Tally etc. can be used.
Obtaining Permanent Account Number (PAN)
Obtaining Tax Deduction Account (TAN)
Obtaining Import-Export Code (IEC) – for exports of services and goods
Obtaining Value Added Tax (VAT) – for engaged in trading business
Obtaining Service Tax Registrations – for rendering service
Obtaining registration under Shops & Establishment Act
Obtaining Professional Tax Registration
Obtaining registration under Employees Provident Fund Organization
Obtaining registration under Employees State Insurance
Statutory Audit under Companies Act, 1956
Tax Audit
Annual Registrar Of Companies Filings
Annual Income Tax return Filings
Quarterly filing of TDS returns
Monthly e-filing of VAT Returns
Half yearly filing of Service Tax Returns
Maintenance of Statutory Registers, Minutes Books, holding Board Meetings, Annual General Meetings
Implication & Penal provisions for Non-Compliances:
(PAN) or Permanent Account number
It’s a mandatory requirement for all the registrations, opening of bank accounts, income-tax return filing, TDS return filing and many more. In nutshell, the Certificate Of Incorporation and the PAN are the two parent document of a company or LLP
No penal provisions are there if company doesn’t apply for PAN but in practical circumstances, a Company or LLP cannot operate without PAN
TAN or Tax Deduction & Collection Account Number
It’s required to be obtained by all persons who are responsible for deducting or collecting tax. It’s compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return),all TDS/TCS payment challan and TDS/TCS certificates.
Stringent penal provision exist for non deduction of taxes, thus an entity cannot deduct tax at source while making payments falling under the scope of Section 192, 194 & 195 of the Income tax Act without TAN
IEC or Importer Exporter Code Registration
It’s normally required by Manufacturers and Companies for International trade but with this new RBI ruling, many freelancers, programmers, web designers and small companies who depend on PayPal for foreign payment will also have to apply for an IE Code.
VAT & CST or Value Added Tax & Central Sales Tax Registration
It’s required for any business that is into Sales whether by way of Trading, Manufacturing, etc be it Proprietary, Partnership, Private Limited concern. Registration under VAT authorities come under two fold :
Compulsory Registration- Based on the value of gross turnover/sales from trading business, which varies from State to State, since VAT is a State subject.
Voluntary Registration- Entities voluntarily register themselves under the authorities.
Accounting & Book Keeping
The Companies Act, 2013 requires every Company to maintain proper books of accounts with respect to:
All sum of money received and expended by the Company and the matters in respect of which Receipts & Expenditure takes place.
All Sales & Purchase of goods by the Company
Assets & Liabilities of the Company
In case of Company engaged in production, processing, manufacturing or mining activities and such particulars regarding utilization of material, labour or other cost of other items as prescribed by Central Government for such Class of Companies.
Proper Books shall not be deemed to be kept:
If they are not kept to give a true and fair view of the State Of Affairs of the Company or it’s Branch Office and to explain it’s transactions.
If books are not maintained on Accrual basis and according to the double entry system of accounting
Statutory audit under The Companies Act, 2013
As per the Companies Act, 2013, the appointment and remuneration of auditors specifying that every Company should appoint Auditors in every AGM until the conclusion of the next AGM and shall within seven days of the appointment, give intimation to every auditor appointed so.
Act also make it clear that for any appointment or re-appointment made a written certificate shall be obtained from the auditors proposed to be appointed, where in certain cases an auditor cannot be appointed without the approval of a special resolution by the company.
Auditor shall be a Chartered Accountant under the meaning of the Chartered Accountants Act, 1949.Unless the Company auditor is not appointed by an appointment letter duly authenticated by the Board Of Directors on the letterhead of the Company, the auditor is not in a position to intimate his appointment to the Registrar Of Companies by filling Form 23B. Non-filing of Form 23B can attract penalty

Tax Audit under The Income Tax Act, 1961
An entity is required to undergo Tax Audit u/s 44AB by a Chartered Accountant mandatorily if the turnover of such Company exceeds the threshold limit of Rs. One Crore
Non-compliances of the provisions shall attract penalty which is 0.5% of the turnover, subject to a maximum limit of Rs. One Lack Fifty Thousand
Annual Returns to Registrar Of Companies : filing needs
As part of Annual Filing, Companies incorporated under the Companies Act are required to file the e-Forms with Registrar Of Companies (ROC):
Form 23AC: For filing Balance Sheet by all Companies
Form 23ACA: For filing of Profit & Loss A/c
Form 20B: For filing of Annual Returns by Companies having Share Capital
Form 66: For filing Compliance Certificate by Companies having paid up capital of Rs.10 Lacs
Form 21A: For filing of Annual Returns by Companies not having Share Capital
Form 11:Annual Return of LLP
Form 8:Statements of Accounts and Solvency for LLP
Form 66, 23AC, 23ACA should be filed within 30days from the date of AGM. Form 20B should filed within 60 days from the date of AGM.
Every LLP is required to file Annual Return in Form 11 to the ROC within 60 days from the closure of financial year. An LLP has to close its financial year on 31st March every year. So, the Annual Returns has to be filed on or before 30th May of every year in Form 8 within 30 days from end of 6 months of such financial year. Accounts are to be filed on or before 30th October every year
Non-filing of the aforesaid forms can attract penalty per form for Companies. For LLP’s penalty is as per the number of day’s default, till date of filing
GET COMPLETE BUSINESS START-UP SOLUTIONS UNDER ONE ROOF
We provide complete business solutions to the start-ups as enlisted below which enable them to focus on their business with peace of mind.

Company Registrations
Limited Liability Partnership Registrations
Start-up Counseling
Creation of General Partnership
Assistance in Local Registration
Other Registrations & Compliances
Book-keeping & Finalization of Accounts
Audit Compliances
Domestic Tax, Advisory and Compliances
International Tax
Company Law
Employee Payroll Processing
Service Tax Compliances

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