All firms are required to file their annual returns at the conclusion of each fiscal year. The same approach must be followed by both small and large organisations. While many small firms skip this stage entirely, it is not recommended because it can result in substantial fines from the Registrar and potentially the directors being blacklisted.
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Maintaining Books of Accounts – Filing Annual Returns
Companies must keep their books of accounts in a certain format, according to the Companies Act of 2013. Furthermore, organisations must keep accurate books of accounts in order to have proper monitoring and control over their operations.
Filing tax returns, making business projections, completing goods and services (GST) returns, and even filing TDS reports are all required while doing so.
The following information must be kept in all corporate accounts:
- A thorough breakdown of all funds received and spent by the business;
- a complete record of all sales and purchases;
- A list of the current assets and liabilities;
- Any other financial transactions, such as payment of salaries.
Annual Return Filing – Appointment of an Auditor
All new businesses must adhere to various regulations. The appointment of a first auditor is a must for successful compliance with these requirements. Within a month of the company’s registration, it must appoint its first auditor.
An auditor for a private limited company can be appointed by anyone who is a qualified chartered accountant (CA) or a firm of CAs. The appointment of an auditor expires at the end of the company’s first annual general meeting (AGM). The auditor may be rehired by the company.
The following persons/entities cannot be appointed as the auditor of a private limited company:
- A legal entity
- A company officer or employee
- A person who is a partner or director of the firm
- A person who is indebted to the company
- A person who is employed full-time elsewhere
When auditors finish their work, they prepare an audit report that explains what they accomplished and expresses their opinion based on their findings. The auditor’s job is to make sure that the financial report’s information as a whole appropriately reflects the organization’s financial situation in a given year. Auditors must follow the government of India’s auditing requirements when assessing the financial report.
Organizing Annual General Meetings (AGMs)
Every business, with the exception of a one-person corporation, is required under the Companies Act of 2013 to hold an annual general meeting (AGM) every year. An annual general meeting (AGM) is a yearly gathering of a company’s participating shareholders that is required by law.
At the AGM, the company’s directors present shareholders with an annual report that includes information about the company’s performance and competitive strategy.
Shareholders with voting rights can also vote on current topics like board of director appointments, executive compensation, dividend distributions, and auditor selection.
Annual Returns are required to be filed
The returns must be filed with the Registrar once the AGM is completed and the firm has adopted the audited financial statements. The filing of a company’s annual returns refers to the submission of audited financial statements in the format stipulated by the Ministry of Corporate Affairs. Within 60 days following the AGM, these returns must be filed.