5 steps to make business compliance easy and avoid tax bumps

5 steps to make compliance easy

Starting a business requires effort. However, maintaining a business requires a much bigger effort. Our business is going nowhere or we are just in the launching phase. Here, any expense which does not directly revamp or catapult our business seems to be a worthless one. We are always bogged down with the feeling that this money could be used for developing your software or marketing or stuff like that. In this dilemma, we often tend to procrastinate and miss out on the very basic compliances. Now, even before it burns down to the annual mandatory compliances, what is more important is to set up processes and systems. These pre-determined processes infuse discipline in the business and serve as the first stone for a 100% compliance environment. In this article, we would be highlighting 5 accounting steps which would help putting your startup in the track towards a zero non-compliance environment.

Read more: Are you aware of the 5 mandatory compliances for your business

1.Using a Separate Bank account for the company related transactions

This is one very common thing which is sometimes missed out by startups. It is your business. Granted. However, legally, your business is a separate entity. Private limited companies and LLPs are legally required to maintain a separate bank account. All business incomes and expenses should be compulsorily transacted through this account.

However, there is no such restriction for sole proprietorships. It is nevertheless advisable for such businesses as well to follow this step. This is, particularly because it helps you keep a track of the amount you are infusing in business, amount you are expending and the resultant profitability.

Taxmantra Tip:

We are often asked by our clients as to private banks are better or nationalized banks. In most of the cases, these are case specific. Private banks are known for their customer service. Whereas, nationalized banks have an edge when it comes to various Govt applications and licenses and also financing. Hence, this would depend upon your business model and requirement. Also, it does not hurt to have a business account in both these types of banks.

2. Construct an Internal Control for Book-keeping

Book-keeping is a pre-requisite for accounting. Bookkeeping means process of recording, categorizing, summarizing and classifying transactions. Book-keeping can be done by various methods like the following:

  • Using a Cloud based application like Quickbooks
  • Using desktop based software like Tally ERP.

Another aspect of accounting is that most startups are not aware of the cash vis-a vis accrual basis of accounting. All private limited companies are required by the Companies Act to maintain its books of accounts on accrual basis. Accrual basis means recording of transactions as and when it occurs, irrespective of whether cash is received.

Taxmantra Tip:

Setting up and maintenance of these controls in-house are often cost intensive and time taking. It is highly advisable for startups and small businesses to outsource these functions as a bundled service. In this way, the data remains centralized and you get a one stop solution for your business.

Read more: One stop solution for your business

3. Set Up Payroll System

A small business may get its job done by its own employees or by way of job/contract. Another way can be appointment of freelancers. Proper planning is required for this. This is because various compliances get attracted owing to this arrangement. For example: if your worker are your employees, you have to set up a basic payroll system with proper salary structuring. On the other hand, if they are your contractors/freelancers, you would have to take care of TDS compliances as per relevant sections.

Taxmantra Tip:

In the initial stages, it is advisable to follow a lean startup regime, wherein the number of employees are to be kept at a bare minimum. This is because, once your startup employs more than a certain limit, various registrations like Provident Fund and ESI get attracted. For eg: if a business has more than 19 employees, PF registration is mandatory and for employees beyond 9, ESIC registration is mandatory.

4. Track your payments and take note of TDS compliances

This is another area wherein most of the times a business is non-compliant.  We make payments to vendors, developers, landlords almost on monthly basis. While making these payments, special note has to be taken for TDS deductions and deposits.

Taxmantra Tip:

Keep a tracker handy for ready perusal. Mail us at info@taxmantra.com for your own copy of TDS tracker.

5. Maintain your secretarial documents

The Companies Act, 2013 has mandated maintenance of certain secretarial records by all private limited companies. These include maintenance of Minutes of the Meetings (Board’s or Member’s), Statutory Registers, Share Certificates, etc. Non-maintenance of these have their own penalties and consequences. Apart from this, non-maintenance of these records also create a number of hurdles for a lot of processes, like Investment, Bank Financing, Govt tenders.

Taxmantra Tip:

Start maintaining these documents from Day 1 of your business. For assistance, write to us at: Taxmantra Secretarial Drafting

Compliances of a business may seem a painstaking process, but if you follow these few simple steps, the road ahead gets a lot smoother.

Read more: Secretarial Compliances and Penalties for non-compliance



In order to assist startups and small businesses in meeting their compliances, we have come up with a one time exclusive AZAADI offer. By this offer, we aim to touch the lives of 50 startups and assist them in staying compliant. This offer includes the 5 basic compliances mentioned above in this article as a bundled service at a discounted price. For more details about this offer, please visit: Taxmantra.com-Get Azaadi from Penalties & Interests

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