Understand the Various Aspects of the Private Limited Company Annual Compliance
Once the incorporation of a business is complete, it becomes mandatory for the company to follow the rules and regulations, which is commonly famous as compliance. The regulatory body defines these rules and regulation. In India, every registered organization intent to operate as per the private limited company annual compliance passed by the Company Act of 2013. India is becoming a growing economic market for new ventures. Also, it has become essential for private limited companies to comprehend the compliance formulated by the regulatory bodies. It will help them grow and develop despite ever-increasing competition in the market. It has been visible that private companies often fail to adhere to the annual compliance regulation and so they face the scrutiny by the MCA (Ministry of Corporate Affairs). Furthermore, the companies end up paying huge penalties. If they continue to violate the regulations, which eventually may cause them to wind up the business. To undergo an audit, any company needs to measure the accuracy and correctness of the company’s performance.
What Do You Understand by Audit and Auditor?
An auditor is an individual who performs a thorough inspection of the company’s operation and its accounts. An auditor creates a final report that contains the details of the review. The report says whether the company is working accurately as per the mandatory company annual compliance or not. If the auditor is not happy with the operation of the company, then he might provide solutions to overcome the loopholes found during the audit, which, when implementation happens, can improve the business operations and, thus, the sales.
Audits can occur anytime in the year. But it generally happens after the company prepares its book of accounts at the end of the financial year. Audits tend to help the company board members check the operations of the company and acknowledge the loopholes in the data shared by the company management to the board members.
Who Performs Audits?
The statutory auditor, who is a practising CA, performs the company audits. The auditor remains independent while conducting the audit and prepares the report for the same. Although there is a provision to change the auditor after a set period, it is not the case with private limited companies. During the company’s general meeting, the board members unanimously decided to appoint the auditor and set the remuneration. The next step is to have the auditor’s consent and inform the company registrar about their appointment. The auditor needs to be eligible for the process as per the Act. To confirm the appointment, the company submits an online ADT-1 form.
How Important is an Audit for a Private Limited Company?
We all know that audits help the board members to check the business undertakings and maintenance level. It also verifies if the company is adhering to legal compliance. Moreover, it is an unavoidable inspection that every business needs to undergo irrespective of the type and size.
Six months before the end of every financial year, the company organizes its annual general meeting. Here they get to look at the final audit report and the company’s book of accounts. If the data is accurate, the statement of the company accounts will forward to the RoC under the company’s annual compliance.
How is the Private Limited Company Annual Compliance Affected by the Audit?
All the private limited companies are responsible for submitting the online form AOC-4 and MGT-7. The form AOC-4 contains the book of accounts (or financial statements) audited by the statutory auditor, whereas the form MGT-7 includes information on the return incurred by the company in the FY. Every company must file the ITR. For this, the companies need to provide the income statement along with the audited financial statements.
Where Can I Get Help With the Private Limited Company Annual Compliance?
To register your business in India, you no longer have to look for the best advisory agency as the 3E Accounting team is on their toes to welcome you. Our company is popular for providing the best business solutions to various companies (small and big). We will provide you with assistance for the annual compliance of the private limited company. Our team of experts will make it easy for entrepreneurs to comprehend the requirements of the private limited company annual compliance.