Accounting, Taxation and Law Requirements for Company

I joined a partnership firm as an accountant some month ago. now that partnership is going to be converted as a private limited company, procedure is in process. I'll be single accountant in this company. I am worried about my job how I will handle my work. please tell me what are the accounting, taxation, law and other requirement of a private ltd. company. Also tell me what are the starting journal entries of pvt. company.

Accountant  from India

There is no need to worried about your job after conversion of your partnership firm into pvt. ltd company. There is no difficulty to maintain the accounts of pvt. ltd. company. If you have followed me as student of my accounting education classroom, how can I see you as unsuccessful in your career? Accounting's rules apply equally to the firms and company. So, your duty is to record transactions according to accounting rules not on the basis of nature of organization. But you have to fulfill accounting, taxation and law requirement for company. I expain each step by step :

{ A } Accounting Requirements

For learning accounting requirements, I recommend you to study Corporate Accounting. Daily transaction will be passed in day book just like you are passing in partnership's accounts. But to making the final account of company will be important and different from partnership's final account.

1. # In company, you have to calculate managerial remuneration as per Indian company act 1956 and will be expenses in your company's profit and loss account. If you did not learn the steps of calculating remuneration of company, please learn its steps at here.

2. # In company, all the profit will not divide in the partners of company like in partnership accounting. Company's partners are known as shareholders of stockholders. Company's entity is different from its stockholders. You have also to transfer your net profit's part to dividend, general reserve. All these things treatment will be in profit and loss appropriation account. If you still did not learn to make this account, learn now at here.

3. # Company Law has given the form of financial statement, you have to prepare balance sheet and cash flow statement according to this.

4. # I do not know your business's nature, If your business is financial, after becoming financial company, you have to follow RBI's rules and regulations. 


{B} Taxation Requirements 


1. Corporate Income Tax 

 In India, company has to pay on his earned income at a flat rate of 30% for Indian company, with a 5% surcharge applied on the tax paid by companies with gross turnover over Rs. 1 crore (10 million). After conversion of you partnership firm into company, you have to file your return via electronic way. If you do not know its basic, watch this video, this is for individual but like this, you have to electronic file of company's return.

2. Service Tax 

Your duty is to collect service tax from customer and deposit to Govt. account, if your company will provide any service.

3. VAT

You have to maintain VAT input and VAT output for net payment of VAT like partnership business's sales tax.  record it in your company's book.


4. Excise Duty 

If your company is manufacturing organization or leader, you have to pay net excise duty after getting excise duty credit.  record it in your company's book.


5. TDS of Employee's Salary


You have also collect TDS from your employee and has to deposit in Govt. account and record it in your company's book.


{C} Law Requirements 


Except Indian Company law and Income tax law, there are also other laws which have special provisions regarding company. I recommend you following law deeply for becoming perfect corporate accountant.

1. # If your new company is relating to export and import, study of FEMA 2000 and  FTDR Act 1992 will be useful for you.

2. # If your company will do work in IT sector, then please study  Information Technology Act 2000.

3. # You should also check statutory provisions relating to employee's deductions.

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Accounting Education: Accounting, Taxation and Law Requirements for Company
Accounting, Taxation and Law Requirements for Company
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