Importance of Compliances for Startup

The startup merely start with little resource and low investment, but the new entrepreneurs expand their business to such extent or point where it becomes difficult to manage certain different tasks, during the progress of the business journey the business person or the entrepreneurs has to move further with the legal side of the business as well, at this point the compliance plays a major role, the legal system involved in business makes business transparent and compatible.

What does Compliance means?

Compliance is a set of rules, set up by the government, which the company has to follow to operate smoothly, in order to maintain a successful running of startup these rules and regulations must be adhered to properly. Compliance basically provides a structure for what to do or what not to do as an organisation.

As the startup or business grows the mechanism of compliance is much needed to deal with the legal aspects of the business, if any, business or company fails to maintain these rules and regulations this leads to legal liabilities such as penalty and also it may bring closure to the business.

Importance of Compliance

To make business or startup to run smoothly the most crucial step to comply with rules and regulations, complying with rules and regulation helps the business to be legally protected, it creates a backup for the growth of business, the compliance service help to build a reputed brand image and if any non compliance issue developed it hampers the reputation of the business and that amounts to loss of trust among the people and depreciation of profit.

As per Government Eligibility Criteria for Startup Approval:

 Startups are either incorporated as a limited liability company or registered as a partnership or have an LLP turnover of less than INR 100 crore in any of the last financial years. Up to 10 years from creation as a startup. Start-ups must aim to innovate/improve existing products, services and processes and have the potential to create jobs/wealth. It must be certified by an Inter-Ministerial Council set up for this purpose. A company formed by splitting or reorganising an existing company is not considered a “startup”.

Some important Compliance in India for Startup

1. Compliance under Income tax 1961
2. Compliance under GST
3. Compliance under labour law
4. Compliance Under Companies act 2013
5. Compliance under Companies Act 2014

Companies established in India must ensure compliance with the companies act 2013 under this compliance there is regulation of remuneration, appointment of auditors, having PAN, TAN and bank account after the establishment, these compliance are necessary to avoid any penalty that may occur in case of non compliance.

Compliance under GST

Under this compliance any business or startup having a turnover which exceeds Rs 40 lakh goods and Rs 20 lakh in services in the last financial year the business needs to get registered, if fail to fulfil GST compliance it would be considered as an offence and would be liable to a penalty

Compliance under Income tax Act, 1961

Under this act every business has to pay income tax return and other liabilities

Compliance under labour law

These compliances are mainly focused to safeguard the rights of employees, companies and trade unions.

Few acts that are included in compliance with labour law are

1. Trade Union Act
2. Factories Act
3. Minimum wages Act
4. Equal Remuneration Act

Compliance for Private Ltd. company

The private registered companies have to comply with different compliances on a yearly basis, if the company is non compliant with the rules, this leads to penalties,

Some mandatory and important compliance are:

1. Board meetings 
2. Annual meetings 
3. Auditor’s appointment 
4. Director’s report
5. E-form filling

How can Lead India help?

Lead India has an expert team of corporate lawyers who will help your company to better understand the compliances and assist you in completing all the legal requirements for such compliances