Running a private limited company is an exciting and rewarding endeavour. However, it comes with its fair share of responsibilities, and one of the most important is annual compliance. Staying compliant is not only a legal requirement but also crucial to the success and prosperity of your business. Failure to comply can result in hefty fines, legal complications, and damage to your reputation. Let us see what it is exactly
To define, Annual compliance for a private limited company refers to a set of compliances a company must fulfil post-incorporation to carry out its operations. With the stated Companies Act 2013, compliances are to be adhered to each year. For instance, with annual compliance, the returns must be registered with the Income Tax Authority, MCA. Undoubtedly, it is a must-have to comply with the governments and other authorities’ rules and regulations when you form a private limited company.
That's why we have created this comprehensive guide to annual compliance for private limited companies.
In this guide, we will take you through everything you need to know to stay compliant, including the legal requirements, essential documents, filing deadlines, and common mistakes to avoid. So let's dive in and stay compliant to prosper!
Importance of Annual Compliance for Private Limited Company
The annual compliance for Private Limited Company calls for you to adhere to the said obligations, and to remain compliant with the rules and regulations. In the Initial step, you are to file an annual return with the ROC (Registrar of Companies), which will keep you in compliance with the law. With that in mind, the Annual General Meeting must be at least held once a year for 6 months from the end of the financial year.
But, Companies that have just been incorporated should hold their first Annual General Meeting within 18 months of their incorporation date or 9 months after their fiscal year ends. Every Private Limited Company must file income tax returns declaring the income earned during this period by July 31, 2019.
Decision: Is annual compliance mandatory for a private limited company or good to have activity?
As per the annual compliance for the private limited company, you must file annual compliance and other tax-related returns. Failing to which, it will lead to heavy penalties for your Company falling in the Defaulter list of ROC. Nonetheless, the next step is to understand the benefits and various implications.