www.vakilsearch.

com

All you need to know

about maintaining
your business
360 Degree Guide to Post-Incorporation
Compliances

Now that you have set up your business, you are required to
stay compliant with few laws and compliance standards set
by the government for standardized functioning. We have
also put together suggestions to ensure that your business
is legally protected.

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Ambattur Industrial Estate, +91 7200 365 365
Ambattur, Chennai - 600 058.
 POST INCORPORATION

Quarterly 1st Annual KYC for

Board Meeting Return Directors

CORPORATE
COMPLIANCES
Appoint First Board Allocation of
+ +
Auditor Meeting Shares (1st Month)

Accounting GST Filing TDS Filing

(Monthly) (Monthly) (Monthly)

TAX AND
ACCOUNTING
COMPLIANCES
Auditing + IT
Filing (Yearly)

Payroll
Management

LABOUR
COMPLIANCES Statutory Compliances PT + PF + ESI
(Registration + Filing)

Shops and Establishment

IEC
Trade Licence

GOVERNMENT
REGISTRATIONS Trademark
MSME & SSI
Privacy Policy
ESOP
Terms of Service
Legal Documentation
Post Company Incorporation Guide 1

The what and why?

CORPORATE COMPLIANCES
Why do you need corporate compliances?

Corporate compliances, a set of rules and requirements, is mandatory to adhere to immediately

after registering your company. The responsibility under the various statutes lies with the director,
company secretary and other stakeholders designated for specific compliances and failing to
comply with these mandates is a costly affair. Ignoring these compliances will lead to a penalty
that could be in the form of a substantial fine or imprisonment or both. The managing director, as
well as the company secretary, is an officer-in-default liable for penal action in case of any default.

What are the first year activities of corporate compliances?

1. First Board Meeting and Statutory Registrations

2. Quarterly Board Meetings and Business Updates
3. Quarterly Board Meetings and Business Updates
4. (End of FY) Quarterly BM Updates and Filing of DIR-3 KYC

ACCOUNTING AND AUDITING COMPLIANCES

Why?
Properly maintaining and handling all tax compliances, applicable from time to time, is very crucial
for any business. An annual return along with audited accounts and tax audit reports must be
submitted at the year-end as per the guidelines. Delays in payment of tax, deferment or incorrect
calculations can attract penal provisions.

What are the annual activities under accounting and auditing compliances?
1. Financial Statements to be prepared
2. Auditing of Financial Statements
3. Filing of Income-tax Return

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Post Company Incorporation Guide 2

LABOUR COMPLIANCES

Why does a company need to abide by the Labour laws?

A company with even a single employee needs to comply with the labour laws that regulate
various compliances to secure the right of the employees and labour at large. Non-compliance of
these mandatory laws will attract penal provision which includes imprisonment, fine or both
depending on the type of default. Imprisonment may extend to 3 years, or more and fine may be
imposed on a daily basis, or a lump sum amount can be charged.

What are the mandatory activities under labour compliances?

1. PT Registration
2. PF Registration
3. ESI Registration
4. PT Filing
5. PF Filing
6. ESI Filing

MANDATORY REGISTRATIONS

There are few mandatory registrations companies are required to abide by to stay compliant.

1. Shops and Establishment

2. IEC (Export Import Code)
3. Trade Licence (Business specific. For example, all food business operators should procure
FSSAI)

NON-MANDATORY LICENCES AND REGISTRATIONS TO PROTECT YOUR

COMPANY

In order to stay legally protected, there are few licences and registrations the company may
choose to get. We have listed out a few essential ones here:
1. Trademark
2. MSME & SSI
3. Privacy Policy
4. Terms of Service
5. ESOP
6. Founder's Agreement
7. Other legal documents to stay protected

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Post Company Incorporation Guide 3

Important Due Dates

FILING
SERVICE AND DATA

GST TDS PF ESI PT ROC IT

MONTH GOODS AND SERVICE TAX TAX DEDUCTED AT SOURCE PROVIDENT FUND EMPLOYEE STATE INSURANCE PROFESSIONAL TAX REGISTRAR OF COMPANIES INCOME TAX

APRIL 25 25-30

MAY 31 25 11 25-30

JUNE 25 25-30

JULY 31 25 25-30

AGUST 25 25-30

SEPTEMBER 25 25-30 30 30

OCTOBER 31 25 25-30

NOVEMBER 25 11 25-30

DECEMBER 31 25 25-30

JANUARY 31 25 25-30

FEBRUARY 15 25 25-30

MARCH 25 25-30

PAYMENTS
SERVICE AND DATA

GST TDS PF ESI PT APIT

MONTH GOODS AND SERVICE TAX TAX DEDUCTED AT SOURCE PROVIDENT FUND EMPLOYEE STATE INSURANCE PROFESSIONAL TAX ADVANCE PAYMENT OF INCOME TAX

APRIL 20 7 15 15 15-20

MAY 20 7 15 15 15-20

JUNE 20 7 15 15 15-20

JULY 20 7 15 15 15-20

AGUST 25 7 15 15 15-20

SEPTEMBER 20 7 15 15 15-20 15

OCTOBER 20 7 15 15 15-20

NOVEMBER 20 7 15 15 15-20

DECEMBER 20 7 15 15 15-20 15

JANUARY 20 7 15 15 15-20

FEBRUARY 20 7 15 15 15-20

MARCH 20 7 15 15 15-20 15

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Post Company Incorporation Guide 4

Appendix - Deep Drive

CORPORATE / SECRETARIAL COMPLIANCE

Registration of the company is just a baby-step that you took towards the compliance law
and there are several mandates post incorporation of your business that one needs to
abide by in order to stay compliant and protected. We have listed out some of the
important ones here:

First Month Mandatory Activities :

i) Appointment of an auditor : All companies are registered in India are required to appoint an
auditor. Within 30 days of incorporating the business, the appointment of first auditor of the
company must be done.

ii) First board meeting : The first board meeting must be held within 30 days of incorporation
of the company. Prior to conducting the meeting, all the Directors should be notified formally.

iii) Allocation of shares: Once the company receives the applications for shares issued by
means of a prospectus, shares are allocated to shareholders on a preset basis.

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Post Company Incorporation Guide 5

Quarterly board meeting: Every organization must conduct its board meeting once in three
months. A proper notification in writing has to be issued to all the directors and if it is not given,
then the meeting should be called off and considered as “invalid”.0000000000000

First annual return: The annual return consists of information and documents, including
balance sheet, profit & loss account, compliance certificate, debt details, etc.

KYC for Directors: All the directors should have been updated in the registry of MCA and allotted
the Director Identification Number (DIN).

Activities in detail:

1. First Board Meeting and Statutory Registrations:

i) Conduct 1st board meeting within 30 days of incorporation

ii) Disclosure of director’s interest and declaration of disqualification
iii) Appointment of first auditors of the company
iv) Opening of bank account
v) Obtaining share certificates of the company
vi) Obtaining statutory registrations like GST (Goods and Service Tax), PT (Professional Tax
Registration), PF (Provident Fund), ESI (Employee State Insurance), IEC (Import Export
Code) etc.
Other optional activities:
vii) Maintenance of Statutory Register
viii) Developing Accounting system for the Company

2. Quarterly Board Meetings and Business Updates :

i) The board shall meet at least once in every calendar quarter, with a maximum interval of
120 days between any two consecutive meetings of the Board, such that at least four meetings
are held in each calendar year
ii) The business updates can be incorporated in the board meeting minutes of the company

3. Quarterly Board Meetings and Business Updates :

i) Quarterly board beeting to be conducted

ii) The business updates can be incorporated in the board meeting minutes of the company

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Post Company Incorporation Guide 6

4. (End of FY) Quarterly Board Meeting Updates and Filing of DIR-3 KYC :

i) Quarterly board meeting to be conducted

ii) Filing of eForm DIR-3 KYC as an annual compliance for the directors of the company
iii) The business updates can be incorporated in the board meeting minutes of the company

TAX AND ACCOUNTING

COMPLIANCES

Accounting
Once the organization is established, it is mandatory to determine the type of accounting for the
business whether accrual method or cash method.

Book-keeping
Bookkeeping helps in making better-informed decisions and gives a clear, accurate picture of the
company’s financial position.

Auditing
Maintaining an effective audit system is important to achieve your company’s goal, minimize the
cost of capital, prevent fraud and misappropriation of assets. Audits can be classified into
statutory audits and internal audits. Your company can either hire internal or external auditors.

Income tax and corporate tax

Companies are taxed at 30% (plus surcharge and health and education cess). If the turnover or
gross receipt of the company does not exceed Rs 250 Crore, then the tax rate is 25%.

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Post Company Incorporation Guide 7

Corporate tax rate for domestic companies

i) Flat 25% corporate tax is levied on the income earned by a domestic corporate (if turnover
crosses 250 cr in the previous financial year, tax rate would be 30%)
ii) A surcharge of 7% on taxes is imposed if the income of a company is more than Rs.1 Crore
(if income is more than 10 Crores, then surcharge is 12% on tax)
iii) 4% Health and educational cess is levied on tax plus surchage

GST registration and filings

This has to be filed in GSTR 3B and GSTR 1. Irrespective of your turnover, even if you are registered
with the exemption limit of 20 Lakhs, GSTR 3B needs to be declared by the 20th of every month.

TDS registration and filings

TDS has to be deducted every month before making the payments with the government and the
TDS statement has to be submitted every quarter. As prescribed by the government four types of
deductions include, Form 24Q, Form 26Q and Form 27Q.

Activities in detail:

1. Financial Statements to be prepared:

At the end of the financial year, profit and loss account, and balance sheet will be prepared for
your company in accordance with the Companies Act, 2013. We will also determine the final tax
to be paid (net of advance taxes already paid).

2. Auditing of Financial Statements:

After the preparation of financial statements, an independent auditor will be auditing your
financial statements. Vakilsearch will liaison with the auditor in completing your annual audit
procedures within due date smoothly. On completion of audit, we will provide final financials for
our secretarial compliances team for filing annual return.

3. Filing of Income-tax Return:

On completion of audit, Vakilsearch will file your annual income tax return in Form ITR 6. Due date
for furnishing Income tax return will be 30th of September.

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Post Company Incorporation Guide 8

LABOUR COMPLIANCES

STATUTORY COMPLIANCE

Provident Fund
Every company with more than 20 employees should compulsorily contribute to the PF. A
minimum of 12% of the basic salary is contributed by both employee and employer as PF. The
entire 12% of employee’s contribution goes into the EPF account along with 3.67% (out of 12%)
from the employer, while the balance 8.33% from the employer’s side is diverted to the EPS
(Employee’s Pension Scheme) .

Professional Tax Registration and filings

This is a state-level tax in which the returns can be filed annually or quarterly, depending on the
liability. Also, penalties differ.

Employee State insurance (ESI)

ESIC is a social security scheme for employees earning Rs. 21,000 or less per month. Employees
can avail cash and medical benefits for them and their families.

PAYROLL MANAGEMENT
Records of the number of workers employed, their salaries, deductions and all those who come
under the tax slab are to be maintained.

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Post Company Incorporation Guide 9

MANDATORY REGISTRATIONS

Shop & Establishment Registration

Companies must be registered with Shop & Establishment Act within 30 days of incorporation.
This regulates the conditions of employees’ work, lists rights of employees in the unorganized
sector. Whether you have employees or not , register within 30 days of incorporating your
business.

Benefits:
1. Cheaper bank loans
2. Easy access to credit
3. Quicker approvals from state and central government bodies
4. Tax rebates
5. Cheaper infrastructure
In case you exceed the investment limits, as noted below, your firm’s registration will be
cancelled.

IEC (Export Import Code):

In order to be authorised for import and export, a business must get IEC from the Export
Promotions Council

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Post Company Incorporation Guide 10

Trade Licence:
A trade license should be sought to start a trade or a business in any particular location. The
license does not permit the holder to run any other business apart for the one the license is issued
for. For example, for any food-related business, procuring FSSAI license is a must to keep a tab on
the quality and standards of food.

NON-MANDATORY LICENCES AND REGISTRATIONS

TO PROTECT YOUR COMPANY

Ensuring protection of Intellectual Property

To retain competitive advantage, ensuring the protection of intellectual property is important.
Intellectual property is a basket of different rights and it can be classified as:
i) Trademarks
ii) Patents
iii) Copyright
iv) Designs

Intellectual property, collectively or individually, can be sold or licensed as they are considered as
intangible assets to businesses. Every business possesses such intangible assets that are at the
risk of financial exploitation. So, it is important for businesses to understand the identify forms of
intellectual property involved in their organization and protect them.

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Post Company Incorporation Guide 11

SSI & MSME registration

This can help in getting access to priority sector lending, tax exemptions and capital investment
and power tariff subsidies. To qualify as an MSME, the business needs to have an investment of
less than Rs. 10 crores in plant and machinery while service enterprises must have no more than
Rs. 5 crores invested in plant and machinery.

Terms of Service and Privacy Policy

The terms of service agreement explain the conditions on which service is being delivered,
privacy policy explains to users what will and will not be done with their information.

Legal Documents:
To stay protected, a company needs to agree, document and abide by the different terms the
invested parties of the company have concurred upon. For this purpose, having it legally
documented can avoid many disputes in the future. Few of the important documents necessary
are listed out here:

i) Founder's Agreement
A founder’s agreement is an official contract signed by all co-founders of the organization
and to be drafted with the help of a legal team. This document is important as it clearly states the
ownership(share/equity allocation) of the business and how it can evolve over time. This
agreement also contains agreed profit share from the business for each member of the company.

ii) Employment letter

Employment letter is a formal letter to confirm that the employee has completed the selection
process and is ready to be on-boarded. It may be termed as offer letter.

iii) Appointment letter

This is an official document that states that the candidate has met all the job requirements.

ESOPs
ESOPs or Employee Stock Ownership Plan may be an attractive plan to woo employees.
Things to be noted are:

i) An ESOP scheme must be drafted and approved in a shareholder’s meeting

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Post Company Incorporation Guide 12

ii) Once approved, companies should issue a “Letter of Grant” to the employees, mentioning

the number of options granted to them; the vesting or “lock-in” period; and how the exercise price

will be determined; conditions under which option vested in employees may lapse

iii) Typically, the standard is 3-4 years of equated vesting with a 12-18 months cliff

iv) When the employee wishes to exercise his vested option, an “Exercise application” should

be filed where his options would be converted into equity

v) ESOPs schemes must be audited periodically by auditors and reports need to be generated

vi) Tax implications

OUR PLANS

Package Details
Plan I Plan II Plan III Plan IV

Annual corporate Annual corporate Annual corporate

Annual corporate compliances compliances compliances
compliances + +
+
Tax & accounting Tax & accounting Tax & accounting
compliances compliances compliances
+ +
Labour Labour
Compliances Compliances
+
Government
Registeration

We have chalked out these details to let you know all mandatory and key point of actions that need
to be done immediately post your company incorporation. We also provide free legal consultation
to help you understand all requisites for your business registration. Contact us at 7200 365 365 or
send an email to support@vakilsearch.com to avail our services.

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