Annual Compliance Checklist for SMEs & Startups

Small businesses are crucial to the growth of the economy, but they often need to gain knowledge of and experience in compliance. This can lead to long-term penalties and disputes. Small businesses should follow the laws and file the right paperwork to avoid these problems. Let us discuss what every SME needs to know and understand to run their business correctly.

An Overview of General Compliance

Companies need to act if incorporated into a company structure. They are as follows:

  1. Each corporation is required to hold four board meetings per year, no more than 120 days apart. The first meeting must happen within 30 days of the company‘s formation.
  2. Within six months of the fiscal year-end, usually September 30, every company must hold an Annual General Meeting (AGM) of shareholders to adopt its financial statements and appoint an auditor. The company’s first AGM must happen within nine months of the first fiscal year’s end, around December 31.
  3. Every company in India must fill out the annual return form (MGT-7) and file it with the Registrar within 60 days of the annual general meeting or the last day it should have been held, usually November 30. A company must pay Rs. 100 per day until it submits its annual return.
  4. Within 30 days of their annual general meeting, companies must file a copy of their financial statements on form AOC-4 with the Registrar of Companies. If the company fails to file the financial statement on time, it must pay Rs 100 per day until it does.
  5. All companies that receive supplies of goods or services from micro and small enterprises and make payments to them more than 45 days after acceptance or deemed acceptance must file a half-yearly return (MSME Form-I) with the Registrar by October 31 for the period between April and September, and by April 30 for the period between October and March.
  6. By June 30, any company that accepts deposits or has an outstanding receipt of money or loan from a company that is not considered a deposit under the Companies (Acceptance of Deposits) Rules, 2014, must file a DPT-3 return with the Registrar of Companies.
  7. Company directors with a “Director Identification Number” must file their DIR-3 KYC form by September 30. If the director filed a DIR-3 KYC e-form last year, they must file a DIR-3 KYC Web. If a director doesn’t fill out the KYC form, he’ll lose his DIN and have to pay Rs 5,000 to fill it out again.
  8. Every company must keep records of every meeting in a numbered book at its registered office or another location approved by the board.
  9. Every director, company secretary, and invitee must sign the attendance sheet at a board or committee meeting. This document records who was present at the meeting and helped ensure that everyone has a chance to review and approve the minutes.
  10. Transactions with related parties need to be approved by the Board of Directors and, if the amount is over a specific limit, also by the shareholders.
  11. Every director at the company’s first board meeting or the first board meeting of each financial year must complete form MBP-1 to disclose any concerns or interests they may have in any company or companies, or corporate, firms, or other associations of individuals, including their shareholdings.

LLP Act Compliance, Payroll Tax & GST- All You Need to Know

Let us discuss the LLP act compliance, payroll tax and GST in detail here.

LLP Act Compliance

An LLP agreement must be filed with the Registrar within thirty days of incorporation. The fee for not filing is Rs 100 per day. LLPs must file Form 11 within 60 days with the Registrar by their fiscal year-end, typically May 30. A daily fine of one hundred rupees will apply from the due date until the return is filed.

An LLP must record its annual accounts on Form 8 within thirty days before the fiscal year ends. This means that yearly accounts must get filed by October 30. If the return is not filed by this date, a fine of one hundred per day will be charged. A qualified chartered accountant or firm must audit LLP accounts if the LLP has a yearly turnover exceeding 40 lakhs.

Payroll Tax

An LLP must end its financial year on March 31 and file its returns with the IT (Income Tax) Department on time, as per the IT Act. LLPs with a turnover of over 60 lakhs are necessary to have their accounts audited under the IT Act. Indian companies must file IT returns by September 30. If the company doesn’t file its return, it must pay Rs. 10,000.

Also Read: All About Draft MSME Policy

GST (Goods and Services Tax)

Form GSTR-2A is used to report changes or additions to the information reported on Form GSTR-2. By the 11th of the following month, inward supplies from suppliers are automatically filled out in GSTR-2A based on the information provided in Form GSTR-1. The form must be filed by the 15th of the following month.

As of December 31, 2019, you must submit Form GSTR 9 with information about your ITC and GST. This will include local, interstate, and import/export details. The return is based on finalizing outgoing and incoming supplies and tax payments by the 20th of the following month.

More Information on TDS & Foreign-invested Companies

If you’re responsible for deducting tax at source (TDS) but don’t, you’ll have to pay 1% per month from the date the tax was supposed to be deducted. If you don’t pay the TDS amount you took out of the payment, 1.5% per month or part of a month will be added until it’s paid. Any business that gets money from outside the country must follow these rules. An Indian company that gives capital instruments to a non-Indian company must fill out Form FC-GPR and send it to the Reserve Bank of India within 30 days. If they do not file this form, they may be subject to penalties.

When companies transfer shares or convertible securities between non-residents and residents, they must file Form FC-TRS with their authorized dealer bank within 60 days. Failing to do so can result in contraventions. Every Indian company that has gotten FDI or an LLP that has acquired a capital contribution has to turn in an annual report of their foreign liabilities and assets by July 15. Breaking the law can lead to financial losses, jail time, and business reputation damage. SME owners should be aware of this to follow the rules and save money.

The Bottomline
With this checklist, you will now be able to run any SME successfully. Ensure to stay on track and focus on preparing vital financial documents with utmost care.

MSMEBlog advises MSMEs on how to obtain proper financing and provides information on available funding sources. Find out more about MSME financing at

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