What is Compliance?

Compliance means conforming to a rule, policy, standard or law.  Compliances are required as it obligates people to work in line with the law. Compliances ensure that the incorporation and business of a firm are in conformity with the law.Filing of all the forms and returns on time is very essential. Heavy penalties are imposed if the Forms are are not filed on time with the Registrar.

  • Sole Proprietorships/Proprietorship have minimal statutory compliances, much lesser than those applicable to the private or public limited companies. It is because of the fact that a sole proprietorship has a no separate legal entity different from its owner or proprietor.It does not avail the benefits of limited liability. The annual income of the proprietor is considered the annual income of the sole proprietorship firm.
  • Proprietorship firms are required to file income tax return each year if taxable income is more than Rs.2.5 lakhs.

The income tax return of a proprietorship that doesn’t require audit. In case the income tax return of a proprietorship needs to be audited as per Income Tax Act, then the return would be due on 30th September. Proprietorship firms would be required to file Form ITR-3 or Form ITR-4-Sugam

Presumptive taxation scheme is designed to help ease the compliance burden of small businesses by assuming a set profit margin on the total income of the business or profession.

Partnership Firm

Partnership firms are required to file income tax return each year.

In the case of every firm, the rate of income tax on the whole of the total income will be 30% percent surcharge on income tax.

In case of change in Business

  • Registration of firm in Form I with a time limit of 1 year.
  • Change in Firm Name or Principal Place or Nature of Business in Form II with a time limit of 90 days.
  • Closing and Opening of Branches in Form III with a time limit of 90 days.compliance
  • Change in Name/Address of Partner in Form IV with a time limit of 90 days.
  • Change in Constitution or Dissolution in Form V with a time limit of 90 days.
  • When a minor becomes major and elects to become or not to become a partner in Form VI with a time limit of 90 days
Limited Liability Partnership (LLP)
  • All LLPs registered with the Ministry of Corporate Affairs need to file Annual Returns and Statement of Accounts for every Financial Year.
  • It is mandatory for a LLP to file a return irrespective of whether it has done any business.
  • There are three mandatory compliance requirements to be followed by LLPs.
    • Filing of Annual Return
    • Filing of Statement of the Accounts or Financial Statements
    • Filing of Income Tax Returns
  • An Audit of accounts is mandatory under the Income Tax Act when the annual turnover of LLP is more than one hundred lakh rupees.
  • All LLPs are required to maintain their Books of Accounts in Double Entry System. They also need to prepare a Statement of Solvency (Accounts) every year ending on 31st March. For this purpose, LLP Form 8 should be filed with the Registrar of Companies on or before 30th October every year.
  • Form 8 or Annual Statements is applicable to the LLPs registered till 30th September 2017. For LLPs registered after 1st October 2017, the Annual Statements can be filed in 2019.
  • It should be noted that LLPs whose annual turnover exceeds Rs. 40 lakh or whose contribution exceeds Rs. 25 lakh are required to get their accounts audited by a qualified Chartered Accountant mandatorily.
Private Limited Company

Private Limited Company is the most popular form of starting a business, there are various compliances which are required to be followed once your business is incorporated.
Compliance Requirement:

  • Appointment of Auditor ( within 15 days of Incorporation)
  • Annual ROC filing - Last Date ( 30th September 2018 )
    • Annual returns
    • Financial statements - Last Date (30th December 2018)
  • Annual general meeting (AGM)
  • Board Meetings
  • Reports of directors
  • Income tax - Last Date ( 30th September 2018)
  • Maintenance of records