Before one plan to commence its business operations, it is mandatory to register the business. Depending on the nature of the business, one must complete the registration formalities with the relevant statutory authority to give it a legal form.
Before one plan to commence its business operations, it is mandatory to register the business. Depending on the nature of the business, one must complete the registration formalities with the relevant statutory authority to give it a legal form.
Private companies are the most popular form for starting a new business as it provides some key benefits, such as:
In India, private companies are governed by the Company Act, 2013 under the administration of the Ministry of Corporate Affairs which regularly formulates and releases rules/regulations that every company must comply with. A company which has been incorporated in India must ensure compliance with the Companies Act, 2013.
The company law mandates various legal compliances that need to be adhered to by private companies. Some of these are reporting of financial statements, reporting of changes in management, maintenance of statutory registers, auditing of accounts etc.
A brief information of the relevant compliances has been discussed below:
There are event-based compliances as well which get activated , in the case the particular event happen, as in :
The company has to keep track of all such events for timely fulfilment of its statutory duties.
Here, it is critical to note that a company’s responsibility to comply with the rules/ regulations within the Companies Act, is NOT a one-time event, but rather a continuous process.
Conclusion
Incorporation of a business is a one-time activity but running a business is a continuous activity which should not be taken lightly. The business requires both an ongoing investment of time and effort, and significant knowledge of many financial and regulatory technicalities.
Managing the routine operations of business along with the complexities associated with the company law, can prove to be a little taxing for many entrepreneurs. Hence, it is advisable to seek professional consultation and understand the legal requirements of running a business, in order to ensure timely fulfilment of compliances, without levy of interest or penalty. There are highly competent professionals in the market today, ready to help you at each stage of the business cycle.
Compliance is not just about ‘doing the right thing’, or ‘ticking a box’ but rather defines how you efficiently run your business. It helps to build the investor’s confidence as it depicts a transparent and open work culture within your organisation.
Remember, the cost of non-compliance is always more than the cost of compliance!