Most of the companies are started as an idea which goes into execution. At the initial stage of execution, we are so focused on our revenue generation that we miss out on regulatory compliance. Registering company, registering for tax and all other form of compliance is overlooked as we think that we will do it when time comes, and it keeps on getting delayed.
Things remains easy when the operations are small and promoters do not look for credit / loan from a bank / financial institution. It becomes a challenge when the promoters apply for a loan as all banks and financial institutions look for a history of records, for some vintage of the business and tax payments. Most institutions look for documents showing a proof of history of the business, taxes and financials.
It is critical that we keep evidence of all the regulatory compliance documents as it greatly eases the whole loan process.
Registration of the business
We should get our business registered with the requisite body. There are different bodies to register a company depending on its constitution – proprietorship, partnership, limited liability etc. Some proprietorship businesses can be registered with local municipal councils. Check with a CA to get full knowledge on where to register your business.
PAN Card and GST Number
PAN Card and GST number have become key documents to check the tax compliance of any business. Further banks ask for Income tax / GST returns, which become critical to file in a timely manner as these are required during review of a business loan application. Businesses may get small amount loans in absence of these documents but when the amount is high, these documents becomes critical.
Memorandum of Understanding (MOU) and Articles of Association (AOA) for a Private Limited Company
These are important documents and are required during the registration of a Pvt. Ltd. company with ROC. A Pvt. Ltd. company needs to keep the ROC updated with their records at all times. Documents which provide latest shareholding structure and business financials are required for loan evaluation. The loan agreements would be signed by the key shareholders.
Besides above, there are many other documents which financial institutions asks during the assessment of the loan application like 6 months to 1 year of bank statement. To grow any business, getting credit is key and to get credit, proper documentation is critical. A good Chartered Accountant (CA) and Company Secretary (CS) will help a business ensure compliance to all regulatory requirements easing the overall loan process and be correct as per law of the land.
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