We all like to be our own boss, and many of us venture into starting our own business. You have probably figured out what kind of company you need to set up… Private Limited / OPC/ Partnership/ LLP… there are quite a few options. And if you still haven’t then there are a bunch of articles on the net that will help you. Hence we are not getting into that, but focussing on what next after the curtain raiser… the common compliance goof ups you learn the heard way.

Tax Deducted at Source - TDS
So you have rented out an office space and are making monthly payments. But have you considered TDS deduction? Then you pay the society maintenance charges, but again TDS? Or you make monthly payments to the courier agency without TDS considerations? Or a marketing agency? Or an external consultant? Even online marketing on Google/ Facebook is subject to TDS. Almost all services come under TDS, and it is important to check its applicability before making any payments. Even on advance payments TDS is applicable! Various TDS sections, rates, deadlines and maintenance of records can be daunting for anyone, and you will only realise your mistake when an auditor or investor raises these issues for which you may have to pay a heavy penalty.

Government licenses
Having a brilliant idea is just not enough, you need to get the right permissions in place. Have you taken the Shop License? Trade License? Professional Tax in most of the states? Did you know you need to take a separate registration for your private limited company, a separate one for all the Directors or Partners, and a separate one for your employees? And registration is not enough… in some states like Maharashtra you need to file Professional Tax returns monthly for the first year (talk about ease of doing business!). Then there are business specific registrations… FSSAI license for food business operators, Drug License, Import Export Code, Broadcasting License and so on. Also registration is not enough, for instance if you are having FSSAI license and your turnover is over Rs.12,00,000/- then you need to file annual returns as well.

GST reconciliations
So your turnover may have reached the threshold and you need to register under GST, or you want to start sales on e-commerce platform hence you need GST registration. You are probably smart to file your returns on your own, or you now have a basic accountant who can do that for you. But have you given a thought on reconciling your purchases with input tax credit? If there difference is more than 10% then you will have to pay. Its important to regularly reconcile your books, chase your suppliers to give you proper ITC or weed out the uncompliant suppliers. Filing returns in time and correctly is just not enough.

EPF & ESIC
Your business is doing great, and your team is growing, but have you crossed the threshold of 10/ 20 employees? Then think of EPF and ESIC. If you are just over the border then maybe showing some of the employees as consultants is an option to delay but don’t forget TDS deduction on consultancy then. If you happen to get into EPF and ESIC, then ensure to file your returns before 15th of the following month to take benefit of various incentives available (which we have discussed in another article) and avoid late filing penalties.

ROC compliances
If you are a Private Limited company or LLP, then the list of compliance is endless. Drafting and maintaining every board resolution, minutes book, annual Director KYC, INC 22A and the list goes on. Did you know that you need to even appoint an Auditor within 30 days of incorporation in a Board Meeting? Even the first Board Meeting needs to be conducted within first 30 days of incorporation. Annual filings and statutory audits are time and money consuming. Moreover delay in any ROC compliance can burn big holes in your pockets.

Startup India
Well, the good news is that this is not a compliance, but a facility provided by the Government to support startups. There are various incentives available to a Startup, most important according to us is an option to enrol for 3 year income tax exemption under section 80-IAC. Also, there are other benefits such as discounted rates for trademarks, benefits in patent application, networking opportunities, a special fund of funds for equity investments, self certification under labour and environmental laws and ease in winding of business.

MSME (Udyog Adhar) and MSME Databank
This is also a facility provided by the Government of India that comes with various benefits such as priority sector lending, rebate in bank interests, PSU to buy compulsorily 3% from women MSMEs, 50% subsidy on patent registration, ease of punishments under the Companies Act, and many more. We have discussed this in depth in a separate article.

To sum it up, India still has a long way to go to make business norms easier, but until then, we are always there to support you and ensure you have to only worry about growing your business. For any details, feel free to contact us on our website, or write to us on support@popcorninfotech.com

Note: The views expressed here are solely of the author and should not be construed as law. Also, Popcorn Infotech Private Limited has a Copyright on this article and copying, republishing this article in part or whole can lead to legal consequences.