A one person company is required to comply to companies act, 2013 and income tax act,1961 in addition to other applicable laws. You need to remember certain mandatory compliance applicable to a one person company in order to avoid penalties and non compliance issues.
In this article, we have listed top 10 post incorporation compliance to help you understand the requirements of income tax and companies act.
File documents for registered office address
In case, registered office address is not filled up in SPICe form at the time of registration, then you are required to file Form INC-22 along with lease agreement, NOC and utility bill.
INC-22 has to be filed within 30 days from the date of incorporation. You can find the date of incorporation from the certificate issued by the government or companies master data at MCA site.
After uploading the form, it will ask you for fee based on your authorized share capital. If you don’t file it on or before 30 days from the date of incorporation, then in addition to normal fee you are also required to pay additional fee while filing.
Additional fee will go up based on the date of delay. We suggest, you to file Form INC-22, on or before the due date of filing.
Meeting of the board of directors
A one person company is compulsorily required to have at least two board meetings with a gap of 90 days. It should be managed in such a way that at least one meeting of the board of directors has been conducted in each half of a calendar year with a gap of 90 days.
Please note, it doesn’t mean that a OPC should maintain the gap of 90 days in all the meetings. Directors of a one person company can meet any number of times, if it’s required for smooth running of the business.
When you conduct only 2 board meetings in a year, you should maintain the gap of 90 days or more, or else it’s not required.
Calendar year starts from January to December.
Board meeting is not required to be conducted if the one person company has only one director.
Appointment of company auditor
Board of directors has to appoint OPC’s first auditor within 30 days from the date of incorporation.
If it’s not done, then within 90 days, auditor has to be appointed by a general meeting. First auditor gets appointment till the end of first AGM to audit books of account till the end of the first year.
As per section 139(1) of the companies act 2013, a OPC is required to conduct the first annual general meeting to appoint a chartered accountant in practice as it’s auditor to hold office from the conclusion of the first annual general meeting till the conclusion of the sixth AGM.
After appointment of your auditor, you need to file Form ADT-1 with ROC within 15 days from the end of the AGM in which such appointment takes place. In the case of first auditor, filing of ADT-1 is not required.
You are required attach following documents to ADT-1:
- Certified true copy of the resolution for appointment of auditor
- Auditor appointment letter
- Intimation sent by auditor under section 143(1) stating that he/she is eligible for appointment.
Open a Bank account and Raise share capital
After incorporation, you can open a bank account with any PSU or private bank.
Please note, this is the first and foremost thing you should do after getting certificate of incorporation from government as cash payments and receipts can be disallowed while calculating your taxable business income under the income tax act, 1961.
After opening the bank account, the member has to deposit total paid-up share capital amount to the bank account of OPC.
Preparation and filing of financial statements
Books of account has to be compulsorily maintained by OPC irrespective of it’s turnover and tax liability.
As a mandatory requirement, you need to prepare financial statements of your One Person Company. Financial statements should have following things:
- Balance sheet as at the end of the financial year
- Income statement or profit and loss account
- Cash flow statements
- Notes to accounts
For a one person company, it’s not mandatory to prepare cash flow statement.
Section 137 require you to file these financial statements and auditor’s report as a attachment to form AOC-4 and file with ROC on or before 180 days from the end of the previous year.
This means, if you are filing your financial statements for the year 2018-19, it has to be filed on or before 180 days from 31st march 2019. This means, you have to file it before 29th September 2019.
Before filing, the financial statement it must be adopted and signed in a board meeting.
Please note, it has no link with the annual general meeting.
Annual return to be filed on or before the due date
Like any other company, a OPC is required to file it’s annual return in form MGT-7 on or before the due date.
Similar to financial statement or AOC-4, annual report in form MGT-7 has to be filed on or before the due date of filing I.e. 180 days from the end of the year.
In relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
Income tax return filing
Annual return of income has to be filed as per the tax laws of India on or before the due date of filing. we do not have any special tax provisions for a OPC.
A one person company is required to prepare it’s annual income tax return as applicable to a private limited and file it in ITR-6 form with the government on or before 30th September of the assessment year relevant to the previous year for which return is prepared.
This means for the financial year 2018-19, you are required to prepare and file your one person company’s income tax return in ITR-6 form on or before 30th September 2019.
Audit of your books of account
As discussed above, a OPC is required to be audited by a chartered accountant in practice before filing financial statements with the ROC. If you are newly incorporated, then within 30 days of incorporation, you must appoint a first auditor. The first auditor must hold office till the conclusion of the first AGM.
In addition to it, you are also required to get your accounts audited as per the provisions of section 44AB of income tax act,1961 if turnover crosses Rs 1 Crore.
After tax audit, you are required to file audit report and statement of particulars in 3CD on or before 30th September of the assessment year relevant to the previous year.
For financial year 2018-19, you are required to get your tax audit done and file the same with the government on or before 30th September 2019. If the date has been extended, then such extended date will be considered as the date of filing.
Displaying company name and other details
OPC name as approved by the registrar along with its registered office address and other details has to be displayed outside all offices or place of business after its incorporation.
Further, a OPC is required to print following details in all business letters, invoices, official publications etc,
- Name of the Company
- Address of the Registered Office
- Corporate Identity Number (CIN)
- Telephone and Fax Number
- E-mail ID
- Company Website
These requirements are prescribed in section 12(3) of companies act, 2013. Non compliance to provisions of section 12, may require you to pay penalty of Rs 1000 per day for the period during which default continues subject to maximum of Rs 1,00,000 on the OPC and every officer, who is in default.
Related party transactions
If the OPC entered into a contract with the member/owner, who is also the director of the company, the OPC unless the contract is in writing ensure that the terms of the contract are contained in a memorandum are recorded in the minutes of the first board meeting held next after the contract.
Within 15 days from the date of approval by the board, the one person company is required to inform the register about every contract entered into by the company.
In addition to above compliances, you may require to fulfill certain other compliances if certain conditions are satisfied. We suggest you to consult a chartered accountant to help you understand all other requirements and do audit of your books of account.