What is the Applicability of the internal audit procedure?

A private Limited Company (Pvt.Ltd) are applicable for internal audit procedures when at some point of time during the financial year, they have outstanding loans or have borrowed from other banks or may be from other financial organizations in that case the internal audit procedure is held. The Applicability of the internal audit procedure can also be held fi the Pvt Ltd Company have a turnover of 100 crore or may be more during the foregoing financial year.

An Internal audit procedure refers to the inspection of its books of account to guarantee that they are correct. An auditor is appointed to supervise the audit. The aim of an audit of the Pvt Ltd Company is to allow the auditor to express his or her point of view. In the procedure of an internal audit, the auditor will have to check various books of accounts, vouchers slips and bills or invoices to check if they are accurately and properly maintained. Internal Audits are mostly done to check the status of the company’s finances and examine its operational effectiveness. The internal audit helps the internal management to make required changes to increase the efficiency in their operations of the Company.

What is the Applicability of Corporate Social Responsibility for Private Limited Company?

Corporate Social Responsibility is mostly the concept of Trusteeship. Corporate Social Responsibility is needed for all companies from private Limited company to limited companies. For the development of the stakeholders, the Corporate Social Responsibility plays a vital role. When an entrepreneur had taken fund from the public, it should be returned back in the same condition as taken from them to run their business.

Companies who have a net worth of 500 crore or more and a turnover of 1000 crore or more and the net profit of 5 crore or more are those companies who come under the applicability of Corporate Social Responsibility law. If the amount to be spend for Corporate Social Responsibility does not outdo Rs. 50 lakhs, in that case there is no requirement for the formation of Corporate Social Responsibility and the function of such committee can be held by the board of the company.

The motive of Corporate Social Responsibility is to secure of some activity for the society. Eradicating poverty, hunger, availability of clean drinking water, special education for children, promoting gender equality, women empowerment, setting up of old age home, proper sanitation are some of the policies which fall under the Corporate Social Responsibility.

Difference Between a Partnership Company And a Pvt Ltd Company

The vital difference between the Pvt Ltd Company and Partnership Company is that there is no minimum capital requirement for starting a partnership company and to start a Pvt. Ltd Company minimum Rs. 1 lakh is required to begin. A Partnership Company has no separate identity from its partners, whereas a Private Ltd Company has a separate establishment to own assets in its name. Registration of the private limited company is mandatory to set up a business.

Whereas in case of a Partnership company both the registered and unregistered partnerships are legal. A Pvt.Ltd company requires maximum 200 shareholders and minimum 2 to form. A Partnership Company can be formed with 2 partners and members not exceeding above 50 members. If there is any change in members or directors in a Pvt ltd. Company it does not affect the company’s existence. Formation of another partnership firm has be done in case there is any change in partner in a Partnership Firm. 

Statutory audit is not applicable in case of a Partnership Firm. The tax audit can be done based on the turnover. A Pvt. Ltd company should appoint an auditor within 30 days of its formation. The ownership in a Pvt Ltd Company can be transferred easily through shares if the shareholders give their permission. In a Partnership firm the ownership is not transferable easily.

How is (OPC)One Person Company different from Sole Proprietorship?

The conception of One Person Company permits a single person to run a company limited by shares. In case of sole Proprietorship body, there is no difference between owner and the business. It is run and owned by one individual. In case of One person Company, the owner and the business are observed as two different organization whereas in case of Sole Proprietorship the owner and the business are characterized as a single organization.

The owner’s liability is limited to his or her investment in the company in a One Person Company (OPC). The liability is unlimited in the case of Sole proprietorship. If there is a loss in the organization then the owner is liable for all the loss. A OPC is registered as a Private Limited Company hence tax has to paid under the Income Tax Act based for private companies. In the situation of tax payment for a Sole proprietorship, the tax is based on an individual’s income, as the income generated by the company is treated as the owner’s income.

On the death of a member of the One Person Company, a nominee can be allocated to run the company, who should be a Indian Citizen an a resident of India. In the case of Sole Proprietorship, with the death of the owner, the business ends there. However, ownership can be passed only with the Will of the owner, if he had executed such Will.

Difference between Mutual Funds and Nidhi Company

Mutual Fund and Nidhi Company are two definite form of business. They are different from each other in terms of their aim, and the nature of the business. Mutual fund and Nidhi Company has a major divergence which is that the Nidhi Company is entitled to deal only with its members. In the case of mutual fund, there is no such restriction. Nidhi Company nature of business is lending and borrowing of money in between its members only.

In Mutual fund business, the money can be received from any investors, henceforth welcoming the deposits and making investments. To build up a profitability savings, self-reliance among the individuals, individuals choose Nidhi Company. To win on the investments, individuals put resources into Mutual Funds. A Nidhi Company develops the habit of savings amongst its members. In the case of Mutual Fund, its main objection is to increase the wealth of the depositors. The deposits received from lending the money to the members of the Nidhi Company can only be used by the Nidhi Company. In the case of Mutual Fund, it can use the amounts of deposits received for making investments or use in chit funds, hire purchase, leasing finance.

Secretarial Compliance and Annual Compliance for a Nidhi Company

The most important Compliance for a Nidhi Company is that a Nidhi Company should file ITR Return in a Form NDH-1 within a time span of 90 days from the end of its first financial year after the Nidhi Company is incorporated. If the ITR Return is not filed within the time period then an application to the regional director is given with a fee for the extension of time.

The main purpose of the Annual Compliances is to give a clear image of the company’s work position and performance during a certain time. Under the Companies Act 2013 and Nidhi Rules 2014, a Nidhi Company needs to meet all the compliances. To avoid penalties under the law for non-compliance, a Nidhi Company Annual Compliance is done annually.

Annual Compliances of Nidhi Company helps in forming a correct perception of the Company’s working specimen and performance. It is mandatory for all Nidhi Company to have an Auditor Certificate which certifies that the company has complied with the Companies Nidhi Rules 2014 and if not complied with those rules should declare the same. The Auditor Certificate will be annexed to the Auditor report of the company.