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DSC, Secretarial Compliance

As you know Digital Signature Certificate is a very important document which facilitates one to sign documents digitally and the signature is considered valid under the law. All filings done by the companies/LLPs under MCA21 e-Governance programme are required to be filed using DSC. Apart from these, to create login credentials for companies in IT portal we need DSC of any one of the Directors. To obtain GST Registration and IEC Registration we will need DSC. 

 

Thanks to the Information Technology Act, 2000 which has established a provision for use of Digital Signatures on the documents submitted in an electronic form that ensures the security and authenticity of the documents filed electronically. This is a secure and authentic way to submit a document electronically. Though there are different classes of DSC’s available, most Govt. Offices have approved Class 2 DSC for Individuals and Class 3 DSC for Companies. As far as the validity is concerned – Validity of Class – 2 DSC is 2 years and validity of Class 3 DSC is 1 year.


In case you lose your DSC, one of the three options can be implemented:



Option 1: Apply for a new one; do Roll Check of the same on the MCA website. The old DSC will be automatically blocked.

Option 2: Revoke the DSC, in case you have DSC serial number.

Option 3: If at all the DSC is used in a fraudulent way, file an FIR complaint with the cyber crime department.

 

Note: In case you have registered the DSC once with PAN using the ‘Associate DSC’ service on MCA website, then new DSC can be updated with the same service. If you are having your DIN issued, then update the DSC under director role using same ‘Associate DSC’ service on the above website.

 

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Post Incorporation

Guess what is the next set of action items in the Checklist for a new Startup planning to be a fully compliant? The answer is – Legal, Accounting, and Compliance work that a startup has to carry within 6 months of its inception. In this article, we are going to be helping you, entrepreneurs, to plan accordingly to win the battle of becoming a successfully compliant startup. This blog precisely will act as a checklist for a new venture planning to be a fully compliant one.

 

LEGAL WORK

  1. Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National). It will take 1 day and cost of INR 100.
  2. Obtain digital signature certificate online from a private agency authorized by the Ministry of Corporate Affairs (National). It will take 3 days and the cost of INR 1,500.
  3. Reserve the company name online with the Registrar of Companies (ROC) (National). It will take 2 days and INR 500 as cost.
  4. Stamp the company documents at the State Treasury (State) or authorized bank (Private). it will take 1 day and INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)
  5. Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National). It will take 5 days and INR 14,133.
  6. Make a seal (Private. It will take 1 day and the cost of INR 350 (cost depends on the number of seals required and the time period for delivery).
  7. Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National). It will take 7 days and the cost of INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for an application form, if not downloaded).
  8. Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department. It will take 7 days and the cost of INR 57 (INR 50 application fee + 12.36% service tax).
  9. Register with the Office of Inspector, Shops, and Establishment Act (State/Municipal). It will take 2 days and the cost of INR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges).
  10. Register for Value-Added Tax (VAT) at the Commercial Tax Office (State). It may take 12 days and the cost of around INR 5,100 (registration fee INR 5000 + stamp duty INR 100).
  11. Register for Profession Tax at the Profession Tax Office (State). The time period is 2 days and No cost.
  12. Register with Employees’ Provident Fund Organization (National). The time period is 12 days and No cost.
  13. Register for medical insurance at the regional office of the Employees’ State Insurance Corporation (National)

 

 

COMPLIANCE WORK

  • Bookkeeping services.
  • Tax return filing (GST,TDS)
  • Quarterly advance tax
  • Payroll services( up to 15 employees)
  • Company returns and ROC compliances
  • Maintenance of statutory records
  • One year free access to ClearTax GST Biz Software (for invoicing).

 


ACCOUNTING WORK

  1. Open a Bank Account – Having a separate bank account keeps records distinct and will make life easier come tax time.
  1. Track Your Expenses – It’s a crucial step that allows you to monitor the growth of your business, build financial statements, etc.
  1. Develop a Bookkeeping System – Bookkeeping is the day-to-day process of recording transactions, categorizing them, and reconciling bank statements.
  1. Set up a Payroll System – Maybe you’ll hire a part-time employee to help you out, or a freelancer to design your logo.  For employees, you’ll need to decide on a payroll schedule and ensure that you’re withholding the correct taxes; there are lots of services that can help with this. 
  1. Investigate Import Tax – When importing products, you’ll likely be subject to taxes and duties. These are fees that your country imposes on incoming goods. Take the time to learn about importing goods.

 

  1. Determine How You’ll Get Paid – When sales start rolling in, you’ll need a way to accept the payments. 
  1. Establish Sales Tax Procedures – The world of eCommerce has shaken up sales tax regulations and they are admittedly a bit confusing due to location issues. 
  1. Determine Your Tax Obligations – If you’re self-employed (sole proprietorship, LLC, partnership), you’ll claim business income on your personal tax return. Corporations, on the other hand, are separate tax entities and are taxed independently from owners. 
  1. Calculate Gross Margin – You need to know the costs incurred to produce your product. 
  1. Constantly Re-evaluate Your Methods – As you keep growing, it’s good to continually reassess the amount of time you’re spending on your books, and how much that time is costing your business. 

Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. For any Legal and Accounting support, Happy to help you, let us talk! ?

 

 

 

 

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Post Incorporation

The global market is growing at an incredible pace with the countries recognizing the importance of globalization and open economies that facilitate easy trade between countries. At this point in time where the export and import between traders across borders is at its peak, it is essential to understand the array of options available with the buyer and seller as regards the payment for the goods so imported or exported. This blog talks about the available Payment Systems in international trade- options for Importers and Exporters.

Some of the most widely options have been discussed briefly below:  

  • Cash in Advance: this is the most common and traditionally used method. Usually, wire transfers, immediate bank transfers etc. While it ensures that the seller is absolutely secure, the factor of security as regards the quantity, quality and time of delivery of goods is not in favor of the buyer and also cause a liquidity problem as regards the cash flow. Accordingly, negotiating these terms with the buyer is usually tricky if the whole payment is demanded prior to the execution of the contract. A token payment is therefore resorted to as an advance payment while the balance is paid after the goods have been delivered.

  • Letters of Credit: This option is relatively better in terms of security of payment to the traders as a third party guarantee is involved. The buyer, in this case approached a bank to provide the seller a guarantee of payment in case the buyer fails to do so. The bank after analysing the credit worthiness of the client, presentation of the required documents to the satisfaction of the bank grants him a letter of credit that is forwarded by the buyer to the seller. This option not only protects the seller as regards the payment for his goods but also provides him/her with an assurance about the party that he/she is transacting with. On the other hand, it is also a viable option for the buyer as he agrees the effect the payment for the goods only after the goods have been received as per the terms of the Contract between them.

  • Open Account: This is another system whereby the seller allows the buyer to avail the credit facility and make the payment for the sale of the goods at a later date after they have been delivered to the buyer. Usually, this period runs in multiples of 30 days such as 30, 60 or even 90 days’ worth of credit as may be negotiated by the parties to the contract. Like Letters of Credit, Open Account also provides the benefit of liquid of cash to the buyer; although, it is riskier for the seller of the goods. However, the risk may be mitigated by employing appropriate techniques such as insurance, financing the transaction with the help of an export credit agency etc.

  • Documentary Collections: This method has recently become very popular amongst the trading class and is gradually overtaking the other forms of payments in international trading. One of the most striking features that is facilitating the use of this method is the uniform method by the International Chamber of Commerce (“ICC”) with is being followed in most of the countries. These principles have been codified under the Uniform Rules for Collections, 1995 Revision, ICC Publication No. 522 and apply to all collections as defined in Article 2. Article 2 defines Collections as the handling by banks of documents, in accordance with instructions received, in order to – obtain payment and/or acceptance, deliver documents against payment and/or against acceptance, or deliver documents on other terms and conditions.

There are two main instruments that may be drawn in accordance with these rules depending upon the facts and circumstances of each and every case. Before we delve into the kinds of instruments available as options to the traders, it is critical that we understand the role of each of the parties that are involved in the transaction and thereby, also understand the process that is followed in securing the payment.



The exporter sells the goods who draws the instrument and approaches the bank (“Remitting Bank”) for the purpose of sending it to the importer’s bank as per the instructions of the exporter along with the documents required to take possession of the goods. The bank of the importer (“Collecting Bank”) receives this instrument on behalf of the importer. The importer then approaches the Collecting bank to honour the terms of the instrument and accordingly collect the documents so as to take possession of the goods so delivered. The payment or the bill of exchange as the case may be is then transmitted to the Remitting Bank that then transfers the same to the Exporter.

Finally, coming to the kinds of instruments that are available as options are:

  1. Documents against Payment (“DP”): The DP terms of payment provide that the documents for obtaining the goods that have been delivered are handed over to the Importer only upon the entire payment having been made by him. For this reason, this draft is also often referred to as a ‘Sight Draft’ as the documents are made available after the actual payment is received on sight of the importer. It is, therefore, one of the most secure options available with the seller.
  2. Documents against Acceptance (“DA”): The DA terms of payment, on the other hand, allow the buyer of the goods to procure the credit facility for the goods. Under these terms, the documents for securing the goods so transported to the importer’s country by the seller are handed over to him against his assurance that the payment will be made in the decided number of days. Usually, this period also runs in multiples of 30, according to the terms of the agreement such as 30, 60, 90 or even 180 days. Accordingly, a DA is also more commonly known as a ‘time draft’.

While the options are many, an informed decision by the parties to the trade contract should be made. They both should take into consideration various factors such as the security of payment, credit worthiness of the buyer, laws of the countries where the parties are located, whether the payment is being made in lump sum or is it deferred etc.


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Post Incorporation, Start up Lessons
Provident Fund
Provident fund is a benefit given to the employees of the firm. While the employee is working in the firm, he along with the employer contributes a part of his salary to the PF fund which provides security after his retirement for his old age.  


Key Elements of Provident Fund
  • It is mandatory for companies or Firms which has 20 or more employees to get registered with PF Department
  • The gross salary of those employees should be INR 20,000 or more
  • The employee along with the employer contributes 12% of the basic salary to the PF fund
  • The Tax is exempted for the employees of the company
  • Who do not have 20 employees but are willing to register can do it voluntarily with the Regional Provident Fund Office to give benefit of PF to their employees.
  • Voluntary Registration can only be done if the number of employee is more than 6 and needs a consent letter from all the employees
  Employee’s State Insurance
Employee’s State Insurance (ESI) is a social security and health insurance for the employees of a firm. During his course of work he along with his employer contributes towards ESI which provides him with security by protecting the employee during sickness, accidents, injury or disability.  


Key Elements of Employee’s State Insurance
  • It is mandatory for companies or Firms to register for ESI when they have 10 or more employees
  • The salary of the employees who needs to be registered for ESI should be INR 15,000 or less
  • The employer contributes 4.75% of the salary while the employee contributes 1.75% for ESI
  • No Voluntary Registration happens for Employee’s State Insurance
  • ESI provides medical insurance and security for the person insured as well as for the members of his family
  • ESI provides insurance cover up to INR 80 lakhs
   
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Change in Office Address, Post Incorporation

The process to change registered office from one state to another:

In order to change registered office from one state to another:

  1. You need to first conduct a board meeting and pass a Board Resolution.

  2. Then conduct a general meeting and pass a Special Resolution.

  3. After that, upload and file form INC-23 and MGT-14 along with Special Resolution and an explanatory statement on the website of MCA within 30 days.

  4. Post which Central Government (NCLT) will send a confirmation for such change to the company (the Central Government will pass the approval within 60 days from the receiving of such application from the company and after receiving the consent of all the stake holders).

  5. After that, you need to upload and file the confirmation from the Central Government/NCLT in form INC-28 with the RoC within 30 days from the date of such approval from the Central Government/NCLT. Thereafter the company can change its Memorandum.  


Attachments to be produced with form INC-23:

  • As per rule 30-31 of Companies (incorporation) rule 2014; form INC-23 needs to be filed by the company with the Regional Director along with the application for the change in registered office

  • As per rule 30-31 of Companies (incorporation) rule 2014; latest list of creditors and debenture holders including their name and address; and the nature and the amount due to them

  • As per rule 30-31 of Companies (incorporation ) rule 2014; the company needs to publish a notice in form INC-26 in the daily newspaper published in English and in the local language of that district in which the registered office is situated within 14 days

  • As per rule 30-31 of Companies (incorporation) rule 2014; the company needs to issue a notice to ?the stake holders such as (debenture holders; creditors; depositor etc.) who is likely to be affected by such change in registered office and intimate his interest and grounds of opposition with the Central Government/NCLT within 21 days from such date of intimation.

  • As per rule 30-31 of Companies (incorporation) rule 2014; INC-28 needs to be filed with the ROC of both the states within 30 days after receiving the approval from Central Government/NCLT


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