Complying with various regulations in India haunts every startup. In general, compliance means conforming to a rule, such as a specification, policy and standard or law. Regulatory compliance describes the goal that organisations aspire to achieve and the steps taken to comply with relevant laws and regulations.
Due to the increasing number of regulations and the need for operational transparency, organizations are increasingly adopting the use of consolidated and harmonized sets of compliance controls. Compliance and its importance are often overlooked by many startups new to the business ecosystem simply because they are not aware of the existing laws. Ignorance may not be bliss in such cases as it affects a startup’s viability and attractiveness to a potential investor.
As the Indian startups are growing, the need for complying with rules and regulations is also becoming necessary. It depends on the nature and size of the business. The entrepreneurs must first know the laws and regulations which they need to comply with.
Pre-incorporation compliances required to be followed to start a new business includes Registration of firm or company, Name approval and Allocation of Designation. For post incorporation compliance, the company needs to apply for PAN and TAN of the company, register for the stock exchange and make payments of various taxes which are levied on the company. These taxes include DIRECT TAXES: Income Tax, Wealth Tax, Corporate Tax and INDIRECT TAXES: Excise duty, service Tax, customs duty, VAT etc.
But after applicability of GST ACT from 1st July, 2017 startups need to register themselves within 30 days of the act being applicable on them and need to pay CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) on goods and services.
The next obvious question is – How to Comply?
Become familiar with your business and the applicable regulations
The basic thing which an entrepreneur must understand is the knowledge of legislation/Acts that are applicable to his business. There are countless national, state and foreign regulations which may impact the business immediately or in the near future.
Demonstrate investment of thought and efforts into formulating a compliance plan
Written policies and procedures should explain the mechanisms for effective compliance to all your employees and any auditors or regulators. (your compliance controls will change and improve over time). A Compliance Officer should be designated (required in some cases) to create a culture of compliance.
Document and maintain key compliance related information
Your company should have an appropriate and well-organized record keeping system (whether hard or soft copy). Documentation should include your written policies and protocols (including previous and current versions), reports and communications with authorities, and case files if needed.
Scale your compliance program to be growth-ready
As your business expands to other cities, states, and countries, start reviewing the agencies and regulations that may impact you. Consider legal counsel to navigate potentially complex foreign regulations. A new array of risks accompanies cross-border transactions, whether in the form of money, goods, or information.