Big businesses invest enormous sums of money in the legal and finance departments, Why? Because they know that at any time, the state bureaucrats could descend on their offices and fine them, big time. Keeping a close eye on the laws in your state is essential for protecting your business’s bottom line. But what if you’re a startup and don’t have any meaningful experience in the matter? What then?
Founders have often gotten into big trouble, thanks to compliance issues. People have lost their jobs, and CEOs have had to step down, all because of compliance issues. So as a business entity, what can you do at your startup to remain on the right side of the law?
Consider Your Statutory Compliance.
To remain compliant as an LLC or a Company, you have to be compliant with the Registrar of Companies. Being compliant with the RoC requires meeting four criteria.
The first is the appointment of auditors. Auditors should be appointed within the first month of the company being set up. They should hold office until the first annual general meeting. Then another auditor should be designated for the next five years. Your business should use SSAE 16 audit services to make sure that you are in compliance with the new SAS 70 standards.
The RoC also says that companies must hold at least one board meeting every quarter. Hence, your company should meet four times each year at the highest level.
The third requirement is to file financial statements and annual returns. Private limited companies have to file annual accounts. These accounts must disclose details of their shareholders and directors. These filings need to be made once per year, usually before the end of September.
Finally, private companies have to keep records that are enforced by company law. These include keeping minutes of board meetings and the AGM. They also include a register of shares, directors, and members as well as the incorporation documents for the company.
Payroll Compliance.
The relationships you have with employees, contractors and consultants is regulated by labor laws. If you decide to employ anybody to work with your firm, you’ll have to comply with these labor regulations, or risk paying a fine. Businesses that employ more than 20 people have to abide by the PF and ESI regulations.
Taxation Compliance.
Businesses have to pay taxes to local state and federal authorities. Thus, it’s essential that entrepreneurs remain compliant with tax law. The tax situation in the US is a minefield for new entrepreneurs, and it can be difficult to navigate.
If for instance, your company is selling goods, you’ll need to comply with the VAT laws in your local state for VAT compliance. You’ll also need to make sure you’re obeying the local income tax laws.
In the US, it’s mandatory for all profits you make to be taxed at 30 percent. This applies to one person companies, limited liability partnerships, and private limited companies. If you own a proprietorship, the individual slab rates apply. All forms of business are required to make annual tax filings.
