Businesses must adhere to the company compliance services to operate within the legal framework set by regulatory authorities. This goes well with every company, be it a small startup or a large corporation; the set of rules and regulations to maintain legal legitimacy is equal for one and all. These rules, often referred to as compliances, cover various aspects such as taxes, employee benefits, environmental impact, and more.
Why Compliance is Essential for Companies
It needs to be understood that compliances are not meant to avoid fines or legal action alone, but it also helps in upholding the company’s reputation and ensuring smooth operations. If compliances are duly followed, it can help companies avoid the risk of penalties, bans, or even closure. As India takes giant strides in industrialization, regulatory framework and the importance of company compliance services are magnified. Compliance also helps the companies build a healthy rapport with the government authorities.
cccThis is due to the lack of proper guidance for which they may find it difficult to comply with tax laws, labor regulations, or intellectual property rights. Thus, the company compliance services come to the fore, too, so that the businesses can focus on growth without worrying about legal hurdles.
Major compliances under the Startup India initiative
The Startup India initiative was launched with much frenzy by the Government of India in 2016 to promote and support startup culture in the country. While this initiative offers numerous benefits to budding businesses, it also calls for compliance requirements that must be followed. So, let’s have a glance at the major compliances that startups need to be aware of under this initiative:
1. Incorporation compliance
If a business in its nascent stage wants to be recognized under the Startup India initiative, companies must register themselves with the Department for Promotion of Industry and Internal Trade (DPIIT). With this recognition, the startups get access to various benefits, such as tax exemptions and easier compliance procedures.
2. Annual filings
Startups ought to comply with the annual filing requirements as laid out by the Companies Act, 2013. Therefore, some of the requisites to be fulfilled are filing the balance sheet, profit and loss account, and annual returns. All the filings must be submitted to the Registrar of Companies (ROC) each year to maintain compliance.
3. Taxation compliance
Startups registered under the Startup India initiative are rewarded with a three-year tax holiday, albeit they need to meet certain conditions. To avail this benefit, startups must comply with income tax laws, and there must not be any irregularity in filing regular tax returns and adhering to the Goods and Services Tax (GST) regulations.
4. Intellectual Property Rights (IPR) Compliance
Startups are known as a venture that counts on innovation. Thus, making intellectual property protection a key area of compliance. The Startup India initiative helps such businesses in fast-tracking the processing and reducing fees for patents, trademarks, and other intellectual property rights. Moreover, startups have the onus of legally protecting their innovations.
5. Labor Law Compliance
Compliance with labor laws is uniform, and startups are no exception. Therefore, some of the compliances that must be abided by are the payment of minimum wages, employee provident fund contributions, and employee state insurance schemes. If these law compliances are ignored, they may well lead to legal issues, making it essential for businesses to follow these regulations.
6. ESOP Compliance
Employee Stock Option Plans (ESOPs) is a potent strategy to attract talents to a startup. However, its implementation is also subject to specific compliance requirements associated with issuing ESOPs. They also include tax implications for both the company and the employees.
This content is meant for information only and should not be considered as advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.