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Benefits of POSH Registration for Small and Medium Enterprises

In the contemporary business environment, small and medium enterprises (SMEs) face numerous challenges, from competition to compliance with various regulations. One critical area that has gained significant attention in recent years is workplace safety, particularly concerning sexual harassment. The Prevention of Sexual Harassment (POSH) Act, enacted in India in 2013, mandates organizations to take proactive measures to prevent sexual harassment at the workplace. For SMEs, POSH registration is not just a legal requirement but a vital step towards creating a safe and respectful work environment. This article delves into the benefits of POSH registration for SMEs, focusing on its importance for POSH compliance, fostering a positive workplace culture, and how organizations like Startup Movers can assist in this process.

Understanding POSH Registration

The POSH Act aims to protect women from sexual harassment at the workplace and establishes a framework for addressing complaints. Under this law, all organizations with ten or more employees are required to implement measures to prevent sexual harassment and ensure a safe working environment. This includes the formation of an Internal Complaints Committee (ICC), conducting awareness programs, and establishing clear policies for reporting and addressing grievances.

For SMEs, which often operate with limited resources, understanding and implementing POSH compliance can seem daunting. However, it is essential to recognize that the benefits far outweigh the challenges.

Key Benefits of POSH Registration

1. Legal Compliance

One of the most significant advantages of POSH registration is ensuring legal compliance. The POSH Act imposes strict guidelines that organizations must follow. Non-compliance can lead to severe repercussions, including fines ranging from INR 50,000 to INR 1 million for repeated offenses. Additionally, non-compliance can result in the cancellation of business licenses or permits, which can be devastating for SMEs.

By registering for POSH and adhering to its requirements, SMEs can avoid these legal pitfalls and focus on their core business operations without the looming threat of legal action.

2. Enhanced Employee Trust and Morale

Creating a safe workplace is paramount for fostering trust among employees. When employees know that their organization takes issues of sexual harassment seriously, it cultivates an atmosphere of safety and respect. This trust translates into higher employee morale and job satisfaction.

A positive work environment encourages employees to perform better and engage more fully with their work. When staff members feel secure in their workplace, they are more likely to contribute ideas, collaborate effectively with colleagues, and remain committed to the organization’s goals.

3. Attraction and Retention of Talent

In today's competitive job market, attracting and retaining top talent is crucial for any organization’s success. Companies that prioritize employee safety and well-being are more appealing to potential hires. A strong commitment to POSH compliance signals to prospective employees that the organization values its workforce and is dedicated to maintaining a respectful workplace.

Moreover, when existing employees feel safe and valued, they are less likely to seek employment elsewhere. High turnover rates can be costly for SMEs due to recruitment expenses and lost productivity during training periods. By fostering a positive workplace culture through effective POSH registration, SMEs can enhance employee retention rates.

4. Improved Workplace Culture

Implementing POSH policies contributes significantly to building an inclusive workplace culture. A well-defined framework for addressing sexual harassment not only helps manage complaints effectively but also promotes open communication among employees.

When employees are aware of the protocols in place for reporting misconduct, they are more likely to voice their concerns without fear of retaliation. This openness fosters a culture of respect where diversity is celebrated, leading to improved collaboration and innovation within teams.

5. Risk Mitigation

Establishing a robust POSH framework mitigates the risk of incidents that could lead to reputational damage or legal challenges. Sexual harassment claims can severely impact an organization's image, leading to loss of clients, customers, or partners who may choose not to associate with a company perceived as unsafe or unprofessional.

By proactively addressing potential issues through effective POSH registration and compliance measures, SMEs can safeguard their brand reputation while demonstrating their commitment to ethical business practices.

6. Support from Experts

Navigating the complexities of POSH registration can be overwhelming for many SMEs, especially those without dedicated HR departments or legal teams. Engaging with professionals who specialize in POSH compliance can streamline the process significantly.

Organizations like Startup Movers offer comprehensive assistance in navigating the intricacies of POSH registration. They provide guidance on establishing an Internal Complaints Committee (ICC), developing policies tailored to specific organizational needs, conducting training sessions for employees, and ensuring all documentation is correctly prepared and submitted.

By leveraging expert support, SMEs can ensure they meet all legal obligations while focusing on their core business activities.

Implementation Strategies for Effective POSH Compliance

To fully realize the benefits of POSH registration, SMEs must adopt effective implementation strategies:

1. Conduct Training Programs

Regular training sessions should be conducted for all employees to educate them about the POSH Act's provisions and the company's policies regarding sexual harassment. This training should cover what constitutes harassment, how to report incidents, and the consequences of violating company policies.

2. Establish Clear Reporting Mechanisms

SMEs should create clear channels through which employees can report incidents of harassment confidentially. This could include designated personnel within the ICC who are trained to handle complaints sensitively and professionally.

3. Promote Awareness Campaigns

Awareness campaigns within the organization can help reinforce the importance of a safe workplace culture. Posters, newsletters, or workshops can serve as constant reminders about the organization's commitment to preventing sexual harassment.

4. Regularly Review Policies

It is essential for SMEs to regularly review their POSH policies and procedures to ensure they remain relevant and effective. Feedback from employees can provide valuable insights into areas that may need improvement or adjustment.

Conclusion

For small and medium enterprises, POSH registration is not merely a compliance requirement; it represents an investment in creating a safe and inclusive workplace culture that benefits everyone involved. By prioritizing POSH compliance, businesses can enhance employee trust and morale while attracting top talent in a competitive market.

Moreover, engaging with experts like Startup Movers provides invaluable support throughout the registration process, ensuring that SMEs meet all legal obligations while fostering an environment where every employee feels respected and valued.

In conclusion, embracing POSH registration is not just about adhering to regulations; it’s about building a foundation for sustainable growth through a commitment to safety and respect in the workplace. As businesses strive for success in today’s dynamic environment, prioritizing employee well-being will undoubtedly yield significant returns in productivity, loyalty, and reputation.

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Essential Guide to Fundraising Due Diligence

Raising funds can be challenging, especially when facing obstacles that hinder investor approval. A well-prepared approach is crucial, as lacking necessary documents or compliance can jeopardize deals and erode trust. This comprehensive due diligence checklist is designed to ensure you are fully prepared with the required documentation, paving the way for successful fundraising.

Understanding Investor Rejections

Consider a scenario where a startup with a promising product idea secures an investor meeting, only to falter due to missing financial statements, ambiguous ownership structures, and unresolved compliance issues. Such situations are not uncommon. Fundraising is not solely about delivering an impressive pitch; it involves demonstrating that your business merits investment. Investors scrutinize various aspects, from financial stability to intellectual property, and even minor oversights can derail potential deals. In 2023, the average duration to close private capital funds was around 15.8 months, with some cases extending up to 21.1 months due to economic slowdowns and increasing compliance complexities. Whether targeting angel investors or venture capitalists, thorough preparation is key.

The 5 Ps of Due Diligence

Investors assess startups through multiple lenses to ensure their investments are sound. Focusing on the 5 Ps of Due Diligence can help align your preparation with investor expectations:

People: Highlight the expertise and strengths of your team.

Product: Showcase the uniqueness and scalability of your offering.

Processes: Ensure operational workflows are efficient and scalable.

Performance: Present clear financial statements and key performance indicators (KPIs).

Projections: Provide realistic growth strategies supported by data-driven forecasts.

Addressing these areas not only enhances your due diligence but also fosters trust and transparency with potential investors.

Fundamentals of Fundraising Due Diligence

Fundraising due diligence is a critical process where investors evaluate the credibility of your startup before committing funds. They thoroughly investigate your business's financial soundness, legal compliance, and market positioning. Missing any vital elements can lead to delays or failed funding attempts.

Key Areas of Focus

Financial Health: Investors require detailed records of revenue, expenses, and profit margins. Accurate financial statements are essential for assessing profitability and risk.

Legal Compliance: This includes valid contracts, intellectual property rights, and adherence to regulations.

Market Validation: Investors analyze competitor landscapes and growth potential to understand your unique value proposition.

Ownership Structure: Clear insights into team expertise and internal processes are crucial for demonstrating operational efficiency.

A comprehensive Seed Stage Due Diligence Checklist can help cover all critical areas without feeling overwhelmed.

Importance of Accurate Valuation

A precise valuation sets clear expectations for both entrepreneurs and investors, serving as a negotiation foundation that reflects your company's true worth. Misestimating value can create significant hurdles in fundraising.

Factors Influencing Valuation

Revenue Growth: Consistent growth metrics indicate a healthy business trajectory.

Market Potential: Targeting larger or underserved markets enhances perceived value.

Intellectual Property: Patents and proprietary technologies provide competitive advantages.

Comparable Companies: Benchmarking against similar startups helps position your valuation appropriately.

Preparing Your Due Diligence Checklist

Before engaging with investors, ensure all necessary documents are organized:

Financial Documents: Current balance sheets, income statements, and tax filings covering the past 2-3 years.

Legal Contracts: Clear agreements related to employment and intellectual property rights.

Ownership Distribution: Transparency regarding equity distribution is vital for investor confidence.

Market Research: Provide evidence of market demand and competitive advantages.

Key Preparations

Conduct a Mock Due Diligence: Engage third-party experts to identify documentation gaps.

Address Potential Red Flags: Resolve issues related to legal disputes or inaccurate data proactively.

Create a Data Room: A secure online space for document access streamlines the due diligence process.

The Role of Technology in Due Diligence

Technology can simplify due diligence by organizing workflows efficiently:

Data Management Platforms: Secure storage solutions improve transparency and save time.

Valuation Software: Tools for generating accurate projections enhance investor decision-making.

Cap Table Management: Systems that track equity distribution clarify ownership stakes for investors.

Compliance Trackers: Tools that help maintain regulatory obligations ensure legal requirements are met.

Conclusion: Building Investor Confidence

Raising funds is pivotal for business growth but requires meticulous preparation. Thoroughly organizing due diligence documentation, accurately valuing your company, and leveraging technology will enhance investor trust. Remember that due diligence is not merely about avoiding pitfalls; it’s about establishing credibility with potential investors. Prepare diligently before meetings to increase your chances of securing funding.

FAQs

Q: Why is due diligence important before raising funds? Due diligence builds trust by ensuring transparency and identifying potential issues affecting investment decisions.

Q: How do I prepare my business for due diligence? Organize financial records, clarify ownership structures, update market research, and ensure all legal documents are accurate.

Q: What common mistakes should I avoid during due diligence? Avoid incomplete records, unclear ownership structures, outdated market data, and unresolved legal disputes that could raise red flags for investors.

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Benefits of Hiring a Virtual CFO for Startups

Hiring a Virtual CFO can be a good decision for companies with limited financial expertise. A virtual CFO should have a solid understanding of financial planning and accounting tools. They should also have extensive knowledge of various financial documents. In addition, a virtual CFO can streamline processes and help your company build a financial foundation for long-term success. A Virtual CFO can help you navigate the peaks and valleys of your industry. They can offer strategic advice on managing risks and opportunities, as well as assist in meeting financial goals. They will also be able to help you manage working capital. 

As a result, hiring a Virtual CFO can make a huge difference in your business' success. Depending on the level of service, a Virtual CFO can range from 1k to ten thousand dollars a month. You can choose the type of service that fits your needs, depending on the features you need and the budget you have to spend. For a fully featured virtual CFO service, expect to spend between 1k and 10k per month. Because Virtual CFOs are flexible, they can work around your schedule. Many of them are experienced and have worked with companies in many different industries. 

Many are also available at various hours to fit in with your business' schedule. A Virtual CFO can also provide specialised knowledge and expertise that your company needs. There are many benefits to hiring a Virtual CFO, but they may not be right for every organisation. A vCFO can also help you when things are getting tough in your business. Their insight into finances and management can help you push your leadership team. This information can be valuable from a management standpoint and can help you feel more in control of your business. If you can't manage the finances yourself, a vCFO can take the load off of your shoulders.

Hiring a virtual CFO can also save your company money. Typically, a virtual CFO will charge a fraction of the salary of a traditional CFO. If you want to get a great deal, it's essential to research the costs of hiring a vCFO. You should also research the salaries of other vCFOs in your area. When hiring a virtual CFO, you should look for a company that has experience in your industry. A virtual CFO with experience in the industry is likely to be more knowledgeable about compliances and regulations than someone with little or no experience. It's important to remember that hiring a virtual CFO can take much less time than hiring an in-house CFO.

Startup Movers are also a good option for small businesses that are in need of an experienced CFO. Since they don't have any corporate overhead, they will be more affordable than hiring a full-time CFO. A virtual CFO will help your company achieve its financial goals by focusing on the tasks that need to be done.

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Significance Of Virtual CFO Services And How It Will Help Your Business To Grow

Though there's no formal description for a Virtual CFO Service, we can understand the concept as a service available to enterprises to bring streamlined and effective fiscal operation and reporting to the table'. Simply put, a CFO Service or CFO results include every task and tool related to accounts and finances. Imagine a situation where you're an incipient, erecting coffers daily. And you're witnessing a steady growth where the duty and compliance issue starts bulging with time. The accountant you hired to review the 'finance matters' might not ultimately endure complex handling obediences and generating optimal reports. 

What would you do in such a situation? 

Numerous would say the stylish result would be to bring an educated superintendent to the platoon to deal with the matter. As simple as the answer might feel, it comes at a high cost. The question that might be coming to your mind now makes our coming section in the blog. 

Do I need a CFO to keep my bus turning?

Yes! A C- suite isn't just a fancy position to add to your company. It's an absolute necessity if you're looking to be the master of your business! A CFO is responsible for understanding and scrutinising the company's fiscal strengths and sins, suggesting corrective results, tracking the cash inflow, and erecting robust fiscal planning. The places of a CFO have developed ahead.  

As mentioned, the CFO looks over the fiscal conditioning, which he does by sticking to GAAP or generally accepted account principles erected by the SEC or Securities and Exchange Commission and other non supervisory bodies. 

The CFO watches over the company's investments and capital structure. He's responsible for overlooking income and expenditure operations. 

He assists the CEO with soothsaying, cost-benefit analysis, and, most importantly, gaining backing for the different enterprises. 

He coordinates with every in-house platoon to give significant input about the fund available to carry out different tasks. This doesn't mean he has to learn about the detailed functioning of every department; knowing just about the financial aspect is further than enough. 

Hiring an educated Virtual CFO for Startups to handle levies and finances would bear businesses to put a high budget at the stalk. Growing companies might see this as a roadblock. This is where an Outsourced CFO Service jumps into the picture. An outsourced CFO Service is a reality or a person who aids businesses to gain sound fiscal health. This service provider generally has an expansive network of educated professionals or experience who work as per the demand. For example, your current platoon has a strong accountant pool, but you need help with adventure fundraising. In this situation, you call out an Outsourced CFO Service. Plus point, this model comes with pay per service charge. 

Types of CFOs that you can hire 

Virtual CFO This is the stylish option for any incipiency or small business that can not go to hire a full-time CFO. They offer the same services, the only difference being that they aren't physically present in the office and manage your business needs nearly. They're pretty less precious than hiring a full-time CFO. 

Outsourced CFO They work on the base of a contract. They offer CFO guidance on a design basis or part-time. 

Part-time CFO They work part-time with you and are charged based on working hours.

Interim CFO As the name suggests, they temporarily join you to manage your business's CFO places.

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Startup Accounting Services - Why you Need One

Many founders of startups are wondering if they should hire an accountant to manage their accounting. This requires many tasks. It is difficult to keep financial records, especially for small businesses that are cash-strapped. Although it may sound like a great idea to hire a bookkeeper, CPA or other financial professional initially, you don't need an entire department. You could get rewarded for your Startup Accounting work in many ways. Entrepreneurs often view their finances in a cautious and uninformed manner. However, they must prioritise their time so that they can focus on other aspects.

An experienced team of accountants can help your startup focus on the areas that matter most to you. They can help you forecast, analyse KPIs and create a financial plan that works for your company. It is important to speak with the founders of the company in order to get the best out of your startup and Accounting Services. This is an essential step for any company. A startup accounting service will make this process easier and more efficient for you. A team that is dedicated to your needs will make the whole process run smoothly. Top accounting firms for startups are able to manage your business's needs efficiently and quickly.

Good accounting teams can help avoid cash shortages. Small businesses often find it difficult to dedicate their time and energy to accounting. Accounting provides a comprehensive view of your company's finances and helps to protect your business from cash shortfalls. These issues can be eliminated by hiring an experienced Startup Accounting company. This will allow you to focus on growing your business. They will also work in conjunction with your staff. Although it is tempting to save money by doing the accounting yourself, it is worth considering hiring an accountant. An accountant can help you keep track of important dates. They will also help you avoid costly mistakes and keep you organised.

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Startup Accounting Services - Why Register a Trademark?

If you are in the beginning stages of a startup, you should register a trademark as soon as possible. This will help you avoid possible trademark infringement problems. You can also register a trademark at a later time if you wish. Though trademark registration is not mandatory for startup companies, a startup should definitely register a trademark as soon as possible. Whether you're selling a product or a service, having a trademark will protect your brand. Startup Trademark registration gives your brand a professional validity and allows you to control your online presence. The registration will also protect your startup from potential competitors. 

The importance of trademark registration cannot be overemphasised. Even if your startup is small, if you're successful, it's worthwhile to have a trademark. Despite the benefits, you might not have time to register a trademark if you're juggling multiple tasks. However, putting it off can have serious implications for your brand's success. Therefore, it's a good idea to engage the services of a Philadelphia trademark attorney. They can perform a thorough trademark search and draft a trademark application. Additionally, they can monitor the use of your trademark and take legal action if necessary. While applying for startup trademark registration, it's important to conduct thorough research on the market for your trademark.

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Need Startup Accounting for Business

Startup Accounting is critical to the success of your startup company. Accounting for a startup company can be a full-time job requiring knowledge, experience, and time. Many startup founders do not have the time or expertise to take care of their own accounting, so a startup accountant is needed. A startup accountant must understand the unique business model of a company in order to provide timely, accurate reporting. When you're running a startup, you need to monitor every penny of every dollar. This includes expenses and revenue. A lack of accurate records can lead to financial problems. Fortunately, startup accounting tools exist to assist you in managing your finances.

Read More: https://www.startup-movers.com/

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Choosing A Virtual CFO For Startups

Choosing a Virtual CFO is an important decision for any company. This professional is responsible for managing a company's finances and provides strategic advice. A virtual CFO should understand the unique dynamics of a business and be an expert in the areas that matter to a company. They are more than just accountants, but should also be strategic thinkers and risk mitigators. For example, a virtual CFO who works in a rural area may have different needs than someone in a metro area. A Virtual CFO can save a company a significant amount of money. In addition to salary, the Virtual CFO can also save a company money on benefits and stock bonuses.

Read More: https://www.startup-movers.com/virtual-cfo/

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We offer Startup GST services to india. Our company specialises in helping businesses comply with Goods and Services Tax (GST). For all transactions, we offer confidential financial consultation. You can pay us with cash, check or credit card. Let's get started!

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Startup ESOP And Its Importance

A Startup ESOP is a type of employee stock ownership plan (ESOP). Startup ESOPs are increasingly popular as a way to retain top talent and reduce the burden of paying high salaries. It also helps reward employees for their work and contributions to the business. In addition to Startup ESOPs, many other types of employee compensation plans exist, including Employee Stock Purchase Schemes, Employee Stock Ownership Plans, and Employee Stock Options Schemes. ESOPs can be approved by the shareholders of the company. Previously, approval of an ESOP scheme required a special resolution filed with the Registrar of Companies.

Read More: https://www.startup-movers.com/startup-esops/

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NEW POLICY ON ADVANCE TAX PAYMENT AND INTEREST THEREON

This is to inform you of a new policy on tax payment introduced by Startup-Movers whereas as a part of our service plan we support payment of taxes by the clients and ensure their tax challan/receipts are generated. This tax payment is made by us on the client’s behalf on receipt of advance payment, made in response to the tax workings shared with the client.

In some unforeseen circumstances, strictly on management discretion, we also pay taxes of some clients on their behalf on credit where an advance payment has not been received. Now onwards, any such tax payments which have not been received by us in advance or not received as a reimbursement within 24 hours of the payment, will attract an interest @18% per annum commencing from the first date of payment of taxes till the date when payment is received by us, which the client will be liable to pay to us. Such interest may be added to monthly retainer invoices of the clients.

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AUDIT AND ASSURANCE FOR STARTUPS

Are you an LLP with a turnover of over ₹ 40,00,000 or does your capital contribution exceed ₹ 25,00,000? Are you a private limited company or a public limited company?

If you fall under the above categories, an audit of your financial statements is compulsory.

What is an Audit?

The audit is the systematic and independent examination of the books of accounts of a legal entity whether profit-oriented or not with a view to assessing if the financial statements provide a  true and fair view.

Who should get their accounts audited?

The mandatory applicability of audit depends on the nature of the legal entity.

In the case of LLP, an audit is compulsorily required if the turnover exceeds ₹ 40,00,000 or the contribution exceeds ₹ 25,00,000 in any year.

For a private limited company, their accounts have to be compulsorily audited every financial year.

In fact, a private limited company has to appoint an auditor within 30 days of incorporation.

In case an auditor is not appointed within 30 days, the shareholders need to be informed. They will be required to appoint an auditor within 90 days of incorporation.

Benefits of Audit

Apart from the obvious peace of mind of complying with statutory requirements, there are several benefits of getting the books of account audited.

Statutory Compliance

It is mandatory to complete the audit once every financial year to meet the statutory requirements. Completion of the audit on time provides the owners with peace of mind. The cost and temporary discomfort of the audit process is a small price to pay compared to the price of non-compliance. Statutory compliance is an important parameter to measure business enterprises by.

Business Process Improvements

A proper detailed audit will take an unbiased look at your internal processes, systems and controls. The audit is the perfect opportunity for experts to suggest process improvements that can make your operations more efficient. Flaws in internal controls, governance, system controls, accounting practices and organisational culture can come to the fore through the audit process giving you the opportunity to fix them.

Enterprise Reputation

An audit is an independent verification of the financial statements of an enterprise that is considered an important parameter by all stakeholders, both existing and prospective. An audit provides credibility and confidence that the financial situation is correctly depicted. This is especially important for potential investors as the audit is an independent evaluation.

Early Identification and Prevention of Fraud

A proper yearly audit helps to identify flaws or loopholes in the system that are being misused or have the potential to be misused in future. Early detection will help the enterprise to plug the loopholes and prevent the occurrence of fraud. In the absence of audits, these frauds can continue for a very long time without being caught.

Better Decision Making

A proper audit confirms the accuracy of the financial statements of the enterprise. This detailed examination along with audit observations provides startups with critical information regarding the financial health of their enterprise. This information helps the business owners in their decision-making process related to financial planning, capital expenditure and budgeting.

Audit forms an important part of compliances and needs to be adhered to in order to avoid penalties. When you register your business entity, it is important to know the statutory requirements regarding audit and ensure that the needs are complied with.

If you want any advisory services for your startup please visit https://www.startup-movers.com/ and we will help you comply with all the statutory requirements that are meant for your entity.

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Startup Accounting Services - Why You Need One

One of the questions on the minds of many founders of startups is whether they should engage the services of an accountant or CPA to handle their company's accounting. It requires multiple tasks. Maintaining financial records is more complex, especially for a small, cash-strapped business. Employing a bookkeeper or CPA may seem like a good idea initially; however, the truth is that you don't require an entire department. A professional Startup Accounting team could be rewarded in a variety of ways. Although many entrepreneurs take their finances from an uninformed and cautious viewpoint, They must prioritize their time to focus on other aspects of their business. 

Engaging an experienced accounting team for your startup can help you concentrate efforts on other areas you run your enterprise. They can assist in forecasting, analyzing KPIs, and creating an effective financing plan for your company. To get the most value from your accounting and startup services, it is essential to talk with the founders of your company. This is a crucial process for any company. An accounting startup service will make the process simpler and more effective for you. The presence of a team who is committed to your specific needs will make the entire process go efficiently. The top accounting firms for startups can manage the needs of your business efficiently and quickly.

A good accounting team can aid in avoiding cash shortages. It's hard for small businesses to devote time and energy to accounting. Accounting aims to present a complete view of your company's financials and safeguard your business from cash shortages. Employing an experienced startup accounting company will help you eliminate these issues and concentrate on expanding your company. They'll also function in tandem with your staff. While cutting costs by performing the accounting yourself is appealing, you must consider hiring an accountant. A professional accountant will help you stay on top of important dates. In addition, they will assist you with staying organized and avoiding costly mistakes.

It can help you find financing, monitor costs, and spot the risks. However, before you decide to employ an accountant, you should be familiar with startup companies' accounting fundamentals. Alongside the bookkeeping aspect, startups need to balance the books and manage the cash flow. If managed properly, these elements can be a crucial factor in the growth of your business. Balancing your books will allow you to identify what's doing well and what's not. This will assist you in making solid financial decisions that help you and your investors. The final result is what is essential most for entrepreneurs, and a professional accountant is a fantastic method to ensure that your business is functioning well and profitable.

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Benefits Of Startup India Registration For New Startups Including Funding Schemes Available

Is your certificate of incorporation/registration less than 10 years old?

Are you a private limited company or a registered partnership or a limited liability partnership?

Has your annual turnover never exceeded Rs100 crore since incorporation or registration?

Is your business focused on innovation, development or enhancement of products or services or has the potential to generate employment and wealth?

If you answer yes to all of these questions, you should read on to understand the benefits that registration under the Startup India initiative can provide your entity.

The popularity of startups and the enthusiasm displayed by entrepreneurs led to the government of India starting and promoting the Startup India initiative. The idea of Startup India is to provide an inclusive platform for the growth of startups by empowering them through innovation and technology support. The startups registered under this initiative have access to several benefits.

It must be noted that a new entity created by splitting or reconstructing an existing business will not fall under this category and all conditions have to be met to qualify as a startup.

The benefits offered by a Startup India registration are several and include the following-

Simple User-friendly process

The process of registering a startup under the Startup India initiative is very simple. You can do it via the mobile app or use the website. All you need to do is to fill up a simple online form and upload a few documents. The process is completely contactless and paperless and will barely take a few minutes.

Cost Benefits

Registering under the Startup India Registration initiative can yield rich benefits. The government provides lists of facilitators of patents and trademarks. Intellectual Property Rights Services are offered at cheaper rates and the response time is also pretty quick. The government bears the facilitator fees while you will bear the statutory fees. You can get an 80 % discount while filing patents.

MONETARY ASSISTANCE

The government has set up a 10,000 crore rupees fund to provide monetary assistance to startups as venture capital. The government offers guarantees to lenders to encourage banks and financial institutions to lend venture capital to these entities.

TAX HOLIDAY FOR 3 YEARS

You can get a 3 year tax holiday if your startup is incorporated between 1st April, 2016 and 31st March 2022. If you get a certification from the Inter-Ministerial Board. You will be eligible for 100% tax rebate on profits for 3 years in a block of 7 years if the annual turnover does not cross Rs 25 crores in any financial year. This gives you a breather to manage your working capital requirements in the initial years of operation.

Tender Application

You are exempted from prior experience/turnover criteria which are applicable for normal companies while applying for government tenders which gives you an advantage.

Research and Development facilities

Seven new Research parks will be set up to facilitate R &D activities for startups. This will give you the scope to focus on your innovations.

Simple compliances

Startup companies have been kept simple to save time and costs. You can self-certify compliances with 9 labour and 3 environment laws via the Startup mobile app.

LTCG exemption for startups

The Income Tax Act has included a new section 54 EE for the purpose of exempting tax on long term capital gains to be availed by eligible startups. To get this benefit, you will have to invest in a fund notified by the Central Government within six months from the date of transfer of the asset. You can make investment in the long-term specified asset up to Rs 50 lakhs which shall remain invested for 3 years. In case of a premature withdrawal, the benefit will be revoked in the year of withdrawal.

TAX EXEMPTION ON INVESTMENTS ABOVE THE FAIR MARKET VALUE

Eligible startups get the benefit of tax exemption on investments above the fair market value.

These investments may include investments made by Indian angel investors, family offices or funds not registered as venture capital funds as well as investments made by incubators.

Choice of Investors

You have the flexibility to choose between venture capitalists and can select your investors.

Ease of Exit

You can shut down your business within 90 days from the date of the winding-up application.

Networking Opportunities

Startup fests will be held twice a year at national and global levels to help entrepreneurs to meet each other and benefit from networking opportunities.

Tax exemption to individuals/HUF on investment of LTCG in startups

Section 54GB has been tweaked to include investment in eligible startups as a basis for exemption of tax on LTCG from the sale of residential property. If any individual or HUF sells a residential property and invests the capital gains in 50% or more equity shares of eligible startups, then the amount invested will be exempt from tax on the condition that the shares are not sold or transferred within 5 years from the date of purchase. The startups can use this amount to buy assets that should not be transferred or sold within 5 years. This incentive is expected to promote investments in eligible startups.

OPTION TO SET OFF LOSSES CARRIED FORWARD AND CAPITAL GAINS IF THERE IS A CHANGE IN OWNERSHIP

If all the shareholders of an eligible startup who have voting power on the last day of the year in which the loss was incurred continue to hold shares on the last day of the previous year in which such loss is to be carried forward, then the carry forward of such loss is permitted, In the case of eligible startups the restriction of holding 51% of voting rights to remain unchanged u/s 79 has been removed.

Additional Privileges

The need for the criteria of prior experience or turnover is relaxed in the case of startups in the manufacturing sector without any relaxation in quality standards or technical parameters with regard to procurement by the government.

Startups are entitled to receive guaranteed funds through the National Credit Guarantee Trust or SIDBI over a span of 4 years.

There is no inspection for the first three years regarding labour laws

There are several funding schemes launched for the benefit of startups. Some of the prominent ones include –

Pradhan Mantri Mudra Yojana

Under the Pradhan Mantri Mudra Yojana scheme, MUDRA Banks offer loans at very affordable rates to micro-finance institutions and NBFCs who extend the loans to startups and MSMEs.

Pradhan Mantri Mudra Yojana is a unique fund of funds that offers a maximum loan of Rs 10 lakhs, and has been designed to empower budding Indian businessmen.  Over 29.55 crore loans amounting to over Rs 15.52 lakh crores have been sanctioned under the scheme till March 21.

New businesses can avail of loans up to Rs 50,000 under Shishu, middle-aged businesses can avail of Rs 5 lakh under Kishor while existing experienced businesses can get up to Rs 10 lakhs.

CREDIT LINKED CAPITAL SUBSIDY FOR TECHNOLOGY UPGRADATION (CLCSS)

Credit Guarantee Trust Fund for Micro and Small Enterprises

This is one of the biggest Startup Loan Schemes launched by the Government where an unsecured loan of up to Rs 1 crore is provided to eligible startups and MSMEs.

Monetary Support to MSMEs in ZED Certification Scheme

ZED or Zero Defect and Zero Effect mission are to incentivize manufacturers to create enhanced products with superior quality and zero defects. The purpose is to help manufacturers use world-class processes to ensure that their products are the best in class.

This scheme has been designed to provide financial help to MSMEs to improve their processes and implement cutting edge technology for their business. This would help them compete at a global level. Under this scheme, the government provides a 15% subsidy for investment up to Rs 1 crore for the enhancement of technology for startups and MSMEs in India.

Setting up Design Clinics

In a bid to promote innovation, the MSME ministry has created a design clinic for promoting design related expertise for startups and MSMEs. Under this scheme, the government provides aid of up to Rs 60,000 for attending design seminars and up to Rs 3,75 lakhs or 75% of the cost of a seminar where the entrepreneurial team can learn design theories, latest trends and practices.

Startup Movers can help you register your startup under the Startup India initiative and complete all the formalities in this regard.

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Company Strike Off

You might have heard of a Company Strike Off and wondered how it works. Startup Movers will clear your doubts, Closing the operations of the company can be achieved by striking off the name of the company from the Register of Companies. This could happen on account of various reasons.

It could also take place if a company applies to the Registrar of Companies to remove its name from the ROC. Dissolution of a company by strike-off is the easiest way of closing a defunct company. This process is laid out in Section 248-252 of the Companies Act, 2013.

How do you process a voluntary application to strike off a company?

The first step is to process a special resolution.

This is necessary to obtain the consent of 75% of members (based on paid-up capital).

Once this is obtained an application can be filed with the ROC to strike off its name from the Register of Companies.

Before this is done, the company will need to extinguish all its liabilities.

What are the situations where a voluntary filing for a strike-off cannot be done?

The company cannot apply for getting the company’s name removed if the following have taken place in the previous three months:

If the company has disposed of rights or property held by it before the end of trade for the purpose of gain in the normal course of business.

If the company has moved its registered office from one state to another or changed its name.

If the company has applied to the National Company Law Tribunal for sanctioning an arrangement and the matter has not been finalised.

If the company has indulged in other activities except for the one that is necessary for applying or meeting a statutory requirement or concluding the company affairs.

If the winding-up of the company under Section XX of the Act is taking place either by the tribunal or through the voluntary application.

Penalties for violation

Any company that applies for removal of its name in violation of the above-mentioned conditions can be punished with a fine that may extend to Rs 1 lakh.

What are the conditions under which the ROC can strike off the Company Name?

If certain conditions are fulfilled, the Registrar of Companies can issue a notice to the company of the intention to remove the company name from the Registrar of Companies. These include –

If the company has not started operations within one year of incorporation.

If the company has remained inactive in the previous two years and has not filed an application to be declared a dormant company under Section 455 of the Companies Act.

Once this application is received, the ROC shall issue a public notice as defined in the Companies Act.

The company can send its representation along with copies of necessary documents within 30 days of the issue of notice. The notice issued by the ROC for removing the company name from the Register is required to be published in the Official Gazette for informing the general public. Once the notice is published in the Gazette, the company will stand dissolved. 

The ROC will remove the company name from the Register after the expiry of the allotted time from the date of notice unless the company provides valid reasons within the specified time.

The Registrar of Companies will confirm that sufficient provision has been made for payment of existing company liabilities and realization of receivables within a reasonable period of time before passing the final order of company dissolution and striking off the name from the register.

Mandatory undertaking from the Board of Directors will be obtained for this purpose and the company assets will remain available to fulfil the obligations after the date of dissolution. No liability of the company management will be extinguished till all the obligations are met.

What is the impact of the dissolution of a company?

Once a company is dissolved under Section 248 of the Act after the issue of notice in the Official Gazette it will stop operations from the date of the notice. The Certificate of Incorporation remains cancelled from the date of dissolution.

Can you appeal to the Tribunal against the dissolution of the Company?

If any person is upset by the ROC order notifying the company dissolution an appeal can be filed to the Tribunal within three years from the date of the ROC order. The Tribunal will consider the reasons for reinstatement and give a reasonable opportunity to both parties to make representations and present their arguments. Based on the strength of the arguments, the Tribunal may pass an order restoring the company name in the Register of Companies.

Once the order is received the company should file a copy of the restoration order passed by the Tribunal with the Registrar of Companies within 30 days from the order date. Once the order is received the ROC will restore the company name in the ROC and issue a fresh Certificate of Incorporation.

If the Registrar of Companies feels that the company name was struck off based on wrong information provided by the directors or the company or as a result of an error then the ROC can apply to the Tribunal to seek restoration. This application can be filed within three years from the date of the dissolution order.

If you need to apply against a dissolution order passed by the Registrar of Companies, Startup Movers can help you to complete the formalities.

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Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to confirm all facts, financial information, and to verify anything else that was brought up during an M&A deal or investment process. https://www.startup-movers.com/due-diligence/

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We are providing Startup ESOP services in India, It is an online platform for startups to get the appropriate external funding and empower entrepreneurs with the appropriate information.

Website: https://www.startup-movers.com/startup-esops/