Operating a Private Limited Company in India does not only concern the business growth and sales. Keeping the proper records of accounts and bookkeeping is one of the most significant tasks. Privat limited Companies do not have the option of not doing accounting as it is compulsory according to the Companies Act, 2013 like other tax regulations.
This blog, by SS FinTax Advisors, offers a discussion on the basic accounting needs of the Private Limited Companies, reasons of their importance, and the significance of professional accounting in business to remain solvent and in compliance.
Learning about Accounting Requirement of a Private Limited Company
A Ltd Company is an independent legal entity. This is to say that it should be able to keep its own financial records, prepare statutory returns and adhere to prescribed accounting standards. Effective accounting guarantees transparency, valid filling of taxes as well as meeting the government authorities easily.
Either your company is new and you are registered through Company Registration in Delhi or it is already existing, then accounting compliance begins on the day one.
Mandatory Books of Accounts
According to Section 128 of the Companies Act, 2013, all the Private Limited Companies should keep correct books of accounts at their registered office. These records are expected to provide a fair and fair picture of the financial status of the company.
Records Required to Be Maintained
- Cash Book
- Journal and General Ledger
- Sales and Purchase Register
- Bank Statements
- Expense Records and Bills
- Register of Assets and Liabilities
- Payroll and Salary Records
Such records should be kept in an accrual basis and on the system of the double-entry system of accounting.
Relevant Accounting Standards
The accounting standards which are required to be adhered to by the Private Limited Companies are prescribed by the Institute of Chartered Accountants of India (ICAI).
- Accounting Standards (AS) are followed in most of the small and medium companies.
- Depending on the turnover and net worth, larger companies might have to adhere to Ind AS.
Compliance with proper standards will bring about uniformity, accuracy, and reliability in the financial reporting.
Financial Statements Preparation
A Private Limited Company should prepare adequate financial statements at the end of each financial year. These include:
- Balance Sheet
- Profit and Loss Statement
- Cash Flow Statement
- Notes to Accounts
Such financial statements are audited, taxed and also complied with ROC. With proper bookkeeping during the year, end reporting is easy and free of errors.
Legal Conformity Associated with Accounting
Statutory compliance is related directly to accounting records. Bad accounting may result in fines and warnings.
Income Tax Compliance
- Filing of Income Tax Return (ITR)
- Advance tax calculation
- Tax audit, if applicable
GST Compliance
- Monthly or quarterly GST returns (GSTR-1, GSTR-3B)
- Reconciliation of books with GST
- Recording of input tax credit properly
TDS Compliance
- Deduction and payment of TDS
- Quarterly TDS returns
- Issuing Form 16 and 16A
ROC Annual Filings
- AOC-4 (Financial statements)
- MGT-7 / MGT-7A (Annual return)
All these compliances are much reliant on the precise accounting information.
Audit Standards of Private Limited Companies
All Private Limited Companies, irrespective of the turnover, are required to have their accounts audited. This is referred to as a Statutory Audit.
Moreover, Tax Audit might be necessary in case turnover exceeds the stipulated limits by the Income Tax Act.
Under proper accounting records, there is a guarantee that:
- Smooth audit process
- Fewer audit queries
- Reduced compliance risks
Use of Accounting Software
Nowadays, the accounting software is being used by majority of the Private Limited Companies as opposed to manual records.
Popular Options Include
- Tally
- Online accounting solutions
Benefits of Using Software
- Real-time financial data
- Reduced errors
- Less complex GST and TDS regulations
- Improved reporting and management
Software based and cloud accounting is normally handled effectively in professional firms providing Accounting and Bookkeeping Service in Janakpuri.
Top Ten Accounting Errors
Some of the common compliance problems encountered by many businesses are because of preventable errors like:
- Failure to update books on a regular basis
- The confusion of personal and business costs
- GST mismatches
- Late filings and penalties
- Lack of professional review
Such errors may affect the cash flow, compliance position, and credibility of the company.
Significance of Accounting Services by a Professional
It might be difficult to do the accounting in-house particularly in the expanding businesses. Professional accounting services offer sophisticated book-keeping, compliance and reporting.
SS FinTax Advisors Assists With
- Full bookkeeping and accounting
- Compliance with GST, TDS and income taxes
- ROC filings and audit support
- Proper financial reporting
A decent accounting partner will bring peace and long-term compliance to the companies that have been registered by the Company Registration in Delhi.
Conclusion
Privacy limited Company Accounting requirements are fairly elaborate and may be considered as binding. Proper books of accounts, adherence to accounting standards, returning of accounts on time, and carrying out of audits are the key to running business smoothly.
By having the assistance of SS FinTax Advisors in a professional manner, businesspersons will be able to concentrate on expansion and at the same time ensure that they remain in the limits of the accounting and taxation regulations. In case you want to hire Accounting & Bookkeeping Service in Janakpuri that should be trusted, you may get professional guidance and stay out of compliance risks and financial efficiency management.