Our dilemma as an Entrepreneur

1
Our dilemma as an Entrepreneur

• Are we meeting our statutory compliance on time
• Are we having following a correct and fair
  accounting practices
• What are the neccesary statutory compliances for
  Proprietorship, Partnership, Ltd Co
• What if I have skipped or miss the deadline of
  meeting our compliances on time?
• What if there is a notice from a statutory body
  relating to my compliances?
• And many more

2
Objective

• Importance of Accounting and Compliance
  Management
• Implementing fair and correct Accounting and
  Compliance Practice
• Timelines of Statutory Compliance
• Use of correct method of Accounting Practices
• Transition phase from Proprietorship to
  Partnership to Pvt or Pub Ltd Co
• How can a fair accounting practice increase the
  valuation of the Company

3
FOREIGN DIRECT INVESTMNT IN RETAIL
4
What Is FDI?

• FDI or Foreign Investment refers to the net
  inflows of
• investment to acquire a lasting management
  interest
• (10 or more) in an enterprise operating in
  an economy
• other than that of the investor .
• It usually involves participation in management ,
  joint
• venture , transfer of technology and
  expertise.
• FDI can be used as one measure of growing
  economic
• globalization.

5
Indian Retail Sector -FDI In Retailing

•  The key routes that Cos. are taking are
• Joint Venture
• Local manufacturing (such as McDonalds)
• Franchising and Licensing Route
• Sourcing from Small scale sector
• Cash and carry operations (such as Metro,
  Shoprite South Africa)
•  

6
SINGLE AND MULTI BRAND RETAIL

• SINGLE BRAND RETAIL
• It implies that a retail store with foreign
  investment can only sell one brand.
• Eg. Nokia , Reebok and Adidas.
• MULTI BRAND RETAIL
• Retail store can sell multiple brands under one
  roof.
• Global retailers like Wal Mart , Carrefour and
  Tesco can open stores offering a wide range of
  household items and grocery directly to consumers
  in the same way as the Kirana stores..

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PRESENT SHAPE OF FDI

• Retail industry Second largest employer (
  with an
• estimated 35 million people engaged by the
  industry).
• FDI in multi brand to 51. New policy will
  allow multi brand foreign retailers to set
  up shop only in cities with a population of more
  than 10 lakhs as per the 2011 census.( there
  are 53 such cities)

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• Foreign retailers will be required to put up 50
  of total FDI in back-end infrastructure
  excluding that on front end expenditures ( land
  cost and rent will not be counted ).
• Big retailers will need to source atleast 30 of
  manufactured or
• processed products from small retailers OR
  MANUFACTURERS .
• According to the newspaper Indo Asian News
  Service , Washington US has said that FDI in
  retail tradewould be beneficial to both India and
  U.S.
• In Jan 2012 SINGLE BRAND FDI hiked to 100 from
  51.

9
FAVOuRABLES

• INDIAN FARMERS Farmers will be the biggest
  beneficiary of FDI in retail who will be able to
  improve their productivity.
• INDIAN CONSUMERS Indian consumers will get
  access to quality goods at a low cost, that too
  at home.
• PROPER TAX SYSTEM Tax revenue will increase like
  VAT and service tax.
• PARTERNSHIP OPPORTUNITY Indian Retailers have
  reason
• to be happy as it involves a lot of learning
  that could take them to higher profitability.
• HIGH AVAILABILITY OF JOBS

10

• DISTRIBUTION SYSTEM 30-35 of Indias total
  production of fruits and vegetables is wasted
  every year due to inadequate cold storage and
  transport facilities. Giant retailers will help
  India to have strong storage system with highly
  developed transportation.
• INDIAN MIDDLE CLASS
• KNOWLEDGE ENHANCEMENT FDI in retail will make
  way for inflow of knowledge from international
  experts.
• MANAGEMENT EDUCATIONAL INSTITUTE BOOM Growth of
  organized retail in India will be a sunrise
  for the management educational institute.
• INFLATION CONTROL Inflation will be curbed.

11
UN-FAVOURABLES

• The new system will displace the traditional
  shops and petty retail shops in markets and
  mohallahs.
• Around 38 people in rural areas and around 47
  in urban areas depend on retail trade for their
  livelihood , which will be affected. Around 14
  crore people are directly or indirectly earning
  from the retail sector. So this may in turn
  render the people engaged there jobless and non
  business oriented.

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Proprietorship

• Singly owned or managed company
• Mandatory Requirements
• Pan Card of Proprietor
• Service Tax Number if providing services covered
  under service tax
• TIN number if engaged in trading of goods covered
  under the Sales Tax Act
• Current Account with any Bank
• TAN Number for TDS deduction
• Statutory Compliance
• Income Tax Return ( ITR 4 )
• Maintenance of Books ( If Tax Audit is compulsory
  )
• Service Tax Return ( if service tax number taken
  )
• Sales Tax Return ( if TIN number taken )
• Filing of TDS Return if Tax Deducted at Source
• Tax Audit If applicable as per Income Tax Act (
  i.e if turnover exceeds the statutory limit)

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Partner Ship

• Various Individuals creates a partnership concern
• Mandatory Requirements
• Pan Card of Partnership
• Partnership Deed
• Service Tax Number if providing services covered
  under service tax
• TIN number if engaged in trading of goods covered
  under the Sales Tax Act
• Current Account with any Bank Can have various
  signatories
• TAN Number for TDS deduction
• Statutory Compliance
• Income Tax Return ( ITR 5 Partnership concern )
• Income Tax Return ( ITR 3 for individuals who
  are partners )
• Maintenance of Books of Accounts
• Service Tax Return ( if service tax number taken
  )
• Sales Tax Return ( if TIN number taken )
• Filing of TDS Return if Tax Deducted at Source
• Tax Audit If applicable as per Income Tax Act (
  i.e if turnover exceeds the statutory limit)

14
Private or Public Ltd Co

• Various Individuals are Directors or Promoters
• Privately held or Publicly held shares
• Mandatory Requirements
• Registration of Company with ROC
• Memorandum of Association and Articles of
  Association
• Pan of the company.
• Service Tax Number if providing services covered
  under service tax
• TIN number if engaged in trading of goods covered
  under the Sales Tax Act
• Current Account with any Bank Can have various
  signatories
• TAN Number for TDS deduction
• DIN required for all Directors ( ROC purpose )
• Digital Signatures required for Director who is
  authorized signatory

15
Private or Public Ltd Co

• Statutory Compliance
• Audit and Tax Audit If applicable as per Income
  Tax Act
• Income Tax Return ( ITR 6 Partnership concern
• Maintenance of Books of Accounts
• Service Tax Return ( if service tax number taken
  )
• Sales Tax Return ( if TIN number taken )
• Filing of TDS Return if Tax Deducted at Source
• Registrar of Companies Annual Return with ROC
  form 20B, 66 for compliance certificate, 23AC and
  ACA
• Tax Audit If applicable as per Income Tax Act (
  i.e if turnover exceeds the statutory limit)

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Income Tax

• Income Tax Site http//www.incometaxindiaefiling
  .gov.in
• Different forms for different concerns
• ITR 4 Proprietorship
• ITR 5 Partnership
• ITR 6 Limited Companies
• Due Dates
• 31st July for whom tax audit is not required.
• For Individuals/Partnership who requires tax
  audit u/s 44AB 30th September
• For Companies 30th September
• Rates of Income Tax
• Individuals As per the Tax Slab
• Partnership and Corporate 30 of the Profit and
  Surcharge

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Tax Deducted at Source

• Income Tax Site http//tin-nsdl.com
• TAN number is compulsory
• TDS deducted should be deposited on or before 7th
  of every month (April to February) and
• TDS deducted in March should be deposited on or
  before 30th April
• Different TDS certificates issued for different
  deductees
• Form 16 for salaried employees
• Form 16A for professionals and other deductees
• Due Dates for filing TDS Returns
• 1st Quarter April to June 15th July
• 2nd Quarter July to Sep 15th Oct
• 3rd Quarter Oct December 15th Jan
• 4th Quarter Jan March 15th May
• Rates of TDS
• Depends upon the deductor and deductee and type
  of transaction

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Sales Tax

• TIN Number has to be obtained compulsorily if
  Sales Tax is applicable i.e once sales
  transaction is done, covered under the Sales Tax
  Act.
• Due date for remittance of VAT and CST returns
  for Financial Year 2010 - 2011 20th of the
  following month.
• Sales Tax need to be deposited monthly/quarterly/a
  nnually depending upon the turnover and quantum
  of Tax Payable.
• Returns can be filed monthly or quarterly
  /annually depending upon the turnover and quantum
  of Tax Payable

19
Service Tax

• Service tax is mandatory if services provided
  covered under the service tax.
• Mandatory for all types of concern
• Rate of Service Tax 10.3 on the services
  rendered
• To apply ST 1 form is required
• To file service tax return ST 3 form is required
• Service Tax Site - http//www.servicetax.gov.in/
• Due dates for depositing service tax is
• Incase of Companies April to Feb (5th of every
  following month) and March 31st March
• Incase of Non Companies April to June 5th
  July, July to Sep 5th Oct, Oct Dec 5th Jan
  and Jan March 31st March
• Due date for filing service tax returns
• Half yearly April to Sep 25th Oct
• Half yearly Oct to March 25th April

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ROC Management

• ROC Tax Site http//www.mca.gov.in
• DIN number to be obtained for every director of
  the company
• To be registered under Companies Act 1956 to
  attain the status of the company
• Annual Return and other compliances has to be
  filed through ROC site
• Digital signature required for authorized
  director
• Due Date of filing the Compliance
  Certificate/Final Accounts is 31st October and
  Annual return is 30th November of the subsequent
  financial year
• Annual return forms 20B, 23 AC ACA, Form 66 for
  compliance certificate
• Compulsory for all registered companies
• Filing charges as per the authorized capital and
  AGM dates
• Maintenance of Books of Accounts, Books of
  Minutes of General meeting and Board of Directors
  Meeting

21
Accounting Management

• Method of Accounting Accrual or Receipt Basis (
  Cash Basis )
• Accounting Standard ICAI Indian GAAP
  General Accounting and Auditing Practices
• Types of Accounts Balance Sheet, Profit and
  Loss, Cash Flow, Ratio Analysis, Bank
  Reconciliation,
• Types of Books Cash Book, Bank Book, Ledger
  Journal Vouching, Debtors and Creditors
• Types of Vouchers Cash, Bank, JV
• U/s 44AA Compulsory maintenance of books of
  account if the turn over exceeds Rs 60 lakhs.

22
Accounting Management Important Figures

• Balance Sheet Assets should match the
  Liabilities
• Profit and Loss Account - Gross and Net Profit
• Earnings before Interest, Tax and Depreciation
• Ratio Analysis Stock Turnover, Debtors
  Turnover, Net Profit, Current Ratio etc.
• Cash Flow and Fund Flow in positive and negative
• Valuation of the Company.

23
Fair accounting and compliance practice

• If accounting and compliance practice followed
  properly and on time you come in good books of
  the regulatory body
• Increase in credit worthiness and easy to obtain
  credit
• Checks on creditors and debtors Helps in to
  reduce the credit period and bad debts
• Increase in valuation of the company as following
  correct accounting principals may give correct
  gross and net profit figures along with other
  relevant figures.

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Advantages of converting the Partnership
Firm/Proprietorship into Private limited company

• Other Advantages
• Separate legal entity.
• Perpetual succession
• Easy transferability of shares
• Distribution of profits by way of dividends
• Remuneration to directors.
• Limited liability of members
• Raising of capital through Issue of equity/
  preference shares and debentures
• Favourable attitude of financial Institutions
  while granting various facilities.
• Precautions
• Interest on capital cannot be paid.
• Deposits can be accepted only from Members,
  Directors and their relatives
• All legal proceedings by and against the company
  remain continued even after the conversion.