Importance of Accounting for Startups

Significance of Accounting for Startups

Accounting must be given prime importance in any business entity as it is most required, especially for controlling and for providing financial reports at the end of the year. Accounting will help a Startup to determine its productivity and its profit from the initial stages of the company. This provides entrepreneurs a method for maintaining accounting information. The accountant hired by the company will keep track of the money spent for business use as well as for personal use, this will help in strategizing on how the money can be saved. In the initial stages of a Startup, the company must hire consultants or interim CFOs to maintain simple accounts rather than spending more on in-house professional resource.

Benefits of Accounting for Startups in Initial Stage

Forecasting Financial Estimates

Every Startup needs to provide information regarding its financial estimates to banks, investors or lenders to obtain funds in return from them. Accounting helps the business to make a business plan which includes estimated monthly expenditure, economic forecast, projected rate of growth of the Startup. This information is really important for a Startup to lure more and more investors to invest in their idea. The investors also ensure that the entrepreneur has a reliable projection of its company’s financial expectations.

Determine Profitability

Accounting helps an entrepreneur to determine its profitability in the future. It helps in monitoring the progress of the company and also to make necessary amendments where necessary. Through accounting, entrepreneurs will get to know where they need to use their assets to generate profit. An entrepreneur also needs to provide financial information to its investors to ensure them that they will be paid in a timely manner. A monthly statement such as a balance sheet and an income statement shows how if a business is blooming or not, these statements helps in determining a business general profitability.

Budget Expenses

Accounting helps an entrepreneur in setting up a Budget for expenditure on various aspects affecting a Startup. Accounting helps in maintaining records of the cashflow in the business, capital is used in hiring of employees, advertising, purchasing of inventory, petty items. Budget helps an entrepreneur is reducing expenditure on not so essential items and by saving the capital for future purposes.

Payroll Accounting

Accounting for startups help an entrepreneur to record its employees’ compensation such as salaries, bonuses, commissions and any other means earned by an employee. It also maintains employees’ portion of Health insurance premium, Social security taxes, paid holidays. This creates a database for the company consisting of all of its employees. Entrepreneurs must consult accounting professionals during the incorporation of its business. This is a must for an entrepreneur as outsourcing will help a company to grow much faster with the help of a trained professional. Outsourcing helps in many ways such as:

Tax Specialization

Taxation is a main aspect where a Startup may face some difficulties beyond the areas of fund raising and finance. This is where trained professionals like Chartered Accountants play a crucial role in the growth of the Startup. A trained professional who knows the tax laws whether it may be direct tax, indirect tax or any other tax involved will smoothen the working of the business. Well managed and transparent taxation is one of the most required aspect in Accounting for Startups.

Focus on Business

An accountant helps an entrepreneur by letting them focus on their product rather than worrying about the finance. The entrepreneur can create partnerships, create relationships, market its product with the help of an accountant. It will provide valuable information to the business to make it grow and earn profits. An accountant will also help in covering the cost as well as reducing the expenses incurred by the company.

Secretarial Duties

A professional accountant can also perform duties of a company secretary as they are specialist in company law. They also see to it that the company is complying and adhering to the laws laid by the Company Act, 2013. Start-ups strictly need to follow these rules from the start as it may result in the dissolution of the company.

Valuable Business Partner

Outsourcing accounting gives a huge importance to start-ups as these outsourcing firms have wide range of expertise working under them. This support from such firms will be very valuable for the Startup as it has a lot more experience when it comes to raising funds, financial planning, financial reporting. It is better to get financial assistance from trained professionals at the early stages of a Startup as it makes the business develop and grow faster. Many entrepreneurs lack accounting skills and tend to make wrong decisions regarding accounting which acts as a negative aspect in accounting for startups.

For more information on Importance of Accounting  for Startups, feel free to reach us on, or call +91-9599444639/+91-9599444630

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GST Registration Procedure


The Goods and Services Tax is destination based indirect tax, levied at the time of consumption of goods and services by the ultimate consumer. It also aims at simplifying the present tax structure in India. It subsumes taxes like Central indirect taxes – Service Tax, Additional Customs Duty, Special Additional Customs Duty, Central Excise Duty, and Countervailing Duty, and Sale indirect taxes – Sales Tax, Central Sales Tax, Entertainment Tax, Luxury Tax, and Octroi/ Entry Tax.GST is just like a duty just on value addition at every stage. The end consumer subsequently bears the GST charged by the last merchant in the Sales Network, with set-off advantages at all the past stages. With the GST all set to be rolled out, we look at the registration procedure.


Any person carrying on any business who has a taxable supply of over Rs.10 lacs in case of Northeastern States Of India and Rs. 20 lacs in the rest of India would be required for registration of GST in India. A mechanism is available for voluntary GST registration to help claim ITC(Input Tax Credit). It must be obtained under 30 days of exceeding the Rs.25 lacs turnover limit. A procedure would be announced for migrating the VAT or service tax registration as a GST registration.

According to Schedule III of the Model GST Law, the following shall be registered compulsorily, disregarding the total turnover of their respective businesses:

• Every person/entity who is registered or holds license under any earlier law, is liable to get migrated under this Act;
• Every person shall be liable to be registered under this Act if his turnover in a financial year exceeds the taxable threshold limit.
• Every person making any inter-state Supply, irrespective of taxable threshold limit;
• persons who are casually taxable i.e. any person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business;
• Every person who are required to pay tax under reverse charge;


It is expected to be provided based on PAN. One of the major advantage of implementation is that the same GST registration number can be used across all states of India against the VAT regimen in which a dealer needs to obtain VAT registration in each of the states (with additional cost and compliance formalities).


For Private limited company

• Certificate of Incorporation
• PAN of the company
• List of Directors along with their personal details
• PAN Card of Directors
• Adhaar Card of Directors
• Passport size Photo of Directors
• Board Resolution
• Address proof of company

For Proprietorship

• PAN of the proprietor
• Address proof of the proprietor
• Photo of Proprietor
• Address proof of Entity

For Limited Liability Partnership

• Certificate of Incorporation
• LLP Dead
• PAN of LLP
• PAN of partners
• Adhaar Card of partners
• Letter Of Authorisation
• Address proof of Entity

For Partnership Firm

• Certificate of Registration
• Partnership Dead
• PAN of Partnership
• PAN of partners
• Adhaar Card of partners
• Letter Of Authorisation
• Address proof of Entity


GSTN maintains a portal for the online GST registration procedure. The applicant is required to submit an online application for GST registration along with the entire and specific details of the goods and services to be dealt. A temporary GST registration number would be provided post the submission of application and the online payment of registration fee.

A copy of the application must respectively be printed, attached with the other mentioned documents and then couriered to the GST department. A final GST certificate would be issued by the concerned officer post the verification of the application along with the documents.


On the registration of a business it will get various advantages of the implementation of GST. Business will legally be approved to gather charge from buyers and pass the tax credit on to the buyers or beneficiaries and will be legally perceived as a provider of goods and services. The business shall thus be having a proper bookkeeping of expenses paid on the input goods or services which can be used for payment of GST due on supply of products or services by the business.

For more information on GST Registration Procedure, feel free to reach us on, or call +91-9599444639/+91-9599444630

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The Ministry of Corporate Affairs has introduced E – Form INC-32 under SPICe (Simplified Proforma for Incorporating Company Electronically) scheme vide MCA’s notification dated 01/10/2016 notifying Companies fourth amendment Rules,2016. This is a very significant initiative for technological advancement. The basic aim is to simplify the incorporation of a company by filling up an e-form INC-32.

EarlierMCA had come with the integrated process of incorporation by filing E-form INC-29. This was a major reform brought by MCA for incorporation of a company which required filing of only one E-form i.e. INC-29 as against the 5 forms filed earlier. As the entire process is in single form, correct filing would mean approval in 48 hours.

For further simplification, MCA has facilitated the process of incorporation by introducing SPICe E-form INC-32 which provides the same facilities as were provided in Form INC-29 with facilitating the process by introducing filing of Memorandum and Article of Association electronically. As against the earlier process, it has the potential to save lots of time and energy, if properly implemented. However, further clarification with regard to incorporation under SPICe is to be provided by Ministry of Corporate Affairs.

As against the facility provided by the e-form INC-29, e-form INC 32 has the facility to fill the form of incorporation of a company even after filing for the INC-1. That is, even if you’ve already filed the INC-1, you can apply for the name of the company INC-32.

The five purposes for company registration, which are application for DIN allotment, reservation of name, incorporation and even PAN and TAN, are fulfilled by both INC-32 and INC-29, but INC-32 has in depth information as compared to INC-29 with an additional introduction of filing of MOA and AOA of the company electronically.

Now under SPICe, Memorandum and Articles of Association should be filed electronically, simplifying the whole process. In E-form INC-33 a copy paste of the objects of the company has to be done and in E-Form INC-34 a choice has to be made amongst the pre-drafted clauses of Articles of Association.
This has made the task of drafting Memorandum and Article of Association much easier for professionals.

With the introduction of the new electronic Memorandum and Article of Association of the company, there is no need of signatures of subscribers and witness. Only the digital signatures of subscribers and witness on the E-Form INC-33 and E-form INC-34 would be enough for the specific purpose!


  • Obtaining digital signatures is a costly affair.
  • The maximum limit for initial subscribers is 7, exceeding to which, the normal procedure of incorporation must be followed.
  • One single name can be proposed in the form as there is no provision for entering multiple names.

Further to this if you seek any further clarity, feel free to write to us on, or you can also call us at +91-9599444639.

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Start Up India Stand Up India Scheme

Now that you have been following our posts for so long, we would like to inform you about the
latest schemes regarding Start-Up India initiated by our government. This information might be of some use to you… On 5th April PM Modi officially launched one of the schemes in Noida. The official portal has been set up. Now it has become even easier for you to get detailed information regarding the Start up India plan. The portal was made live on April 1 2016. You can find all the information regarding the enrolment into the scheme which includes the online application forms, how to apply for loan etc. To simply know the working just navigate to the “Action plan” on the portal. For all latest notifications, you can navigate to “Notification” Section. A pdf file containing the list of incubators can be downloaded by interested applicants. For List of SEBI Registered funds, you can Visit HERE. If you have any queries regarding the “Start-up India Scheme” you can make use of the official Contact Us Page.

The whole world witnessed the launch of an ambitious programme in India on 16th January 2016.
The launch event took place in Vigyan Bhawan, New Delhi. Many of you still might not be clear about the goal, highlights and features of Start-up India programme but through this article you can find all the available information regarding the same. So if you have queries like – What is Start Up India Stand Up India Scheme ? Who can Apply ? How to Apply ? Application Form downloads etc, read the given information for the answers.

The economy of any country depends on its countrymen. Larger the number of employed or working
people, better be the economy. The Indian government has realized that Indians have great
potential when it comes to ideas; all they need is a promising opportunity or maybe a kickstart. Many people dream of starting up their own business, but due to financial or lack of opportunity they are unable to do so; hence Indian govt in the leadership of Mr. Narendra Modi has decided to offer a gift as a nation wise program- “Start Up India”.

Mr. Narendra Modi in his speech acknowledged that Indians have ideas and capability, all the need is a little push.

“Start Up India” is a revolutionary scheme that has been started to help the people who wish to start their own business. These people have ideas and capability. The government decided to give them support to make sure they can implement their ideas and grow. Success of this scheme will eventually make India, a better economy and a strong nation.

Start Up India Scheme – From Job Seekers to Job Creators

Technology is evolving with a pace faster than ever. This has given birth to various new businesses like E-commerce, internet marketing etc. giving a great scope of development in such areas. Those who plan to start new business are eligible to apply. Gapeseed Consulting knows that setting up a business has its own constraints – forming a company, taking approvals, taking care of legal compliances and registration etc. It isn’t a cakewalk for others but it is definitely easy for our clients. We will walk you through all the steps required for your Start-up.

During his speech at the event, Mr. Modi said that they are trying to make the youth Job Creators, rather than Job Seekers. He also said that one’s mindset should not be towards earning money in the initial phase, it should be rather on grabbing and using the opportunities.

Start Up India Stand Up India Scheme – Action Plan in Detail and How Gapeseed Consulting can do it for you.

  • E- registration has to be done. The application forms for start-up India are made available in
    April 2016.
  • A self-certification system has been launched.
  • A dedicated web portal and mobile app will be developed.
  • Arrangement of self-certificate based compliance.
  • No inspection during the first 3 years.
  • 80 percent reduction in the application fee of start-up patent.
  • Easy exit policy.
  • Inclusion of Credit Guarantee Fund.
  • Relaxation in Income Tax for first three year.
  • Special Arrangement for Female applicants.
  • Introduction of Atal Innovation Mission: Innovation courses will be started for the students.

As per the sources, the online application forms will be launched this month in April 2016. Interested applicants need to provide the required details in the application form. We will help you review you application so as it doesn’t get rejected.

For further queries and to know more about the Start-up India initiative, you can drop us a line here or feel free to send in an email to

Gapeseed Consulting will be more than happy to help you setting up your own business.

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Social Security Systems for Effective Payroll Management

Gapeseed Facility & Management Services is a vertical of Gapeseed Consulting where in we provide HR solutions – right from staffing, recruitment, training and payroll management.

As we progress with our clients with their staffing & payroll processes – we constantly felt the need to explain the Social Security

Systems for effective Payroll Management.

The social security system in India is controlled by the government and applies to only a small portion of the popular.

The social security system includes not just an insurance payment of premiums into government funds, but also lump sum employer obligations. It is significant to understand the Social Security Systems for effective Payroll Management.

Generally, India’s social security schemes cover the following types of social insurances:


The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 (EPF & MP Act) which applies to specific scheduled factories and establishments employing 20 or more employees and ensures terminal benefits to provident fund, superannuation pension, and family pension in case of death during service. Separate laws exist for similar benefits for the workers in the coal mines and tea plantations.


The Employees’ State Insurance Act, 1948 (ESI Act) which covers factories and establishments with 10 or more employees and provides for comprehensive medical care to the employees and their families as well as cash benefits during sickness and maternity, and monthly payments in case of death or disablement.


The Maternity Benefit Act, 1961 (M.B. Act), which provides for 12 weeks wages during maternity as well as paid leave in certain other related contingencies.


The Payment of Gratuity Act, 1972 (P.G. Act), which provides 15 days wages for each year of service to employees who have worked for five years or more in establishments having a minimum of 10 workers.


The Employees’ Compensation Act, 1923 (WC Act), which requires payment of compensation to the workman or his family in cases of employment related injuries resulting in death or disability.

The payroll management system differs at different levels depending upon the industry, the type of business entity, the state rules & regulations which applicable to the company etc. Here are the details on the following Social Insurances as applicable in the Payroll Management Systems of almost all large corporate houses.


The Employees’ Provident Fund Organization, under the Ministry of Labor and Employment, ensures superannuation pension and family pension in case of death during service. Presently only about 35 million out of a labor force of 400 million have access to formal social security in the form of old-age income protection. Out of these 35 million, 26 million workers are members of the Employees’ Provident Fund Organization, which comprises private sector workers, civil servants, military personnel and employees of State Public Sector Undertakings.

The schemes under the Employees’ Provident Fund Organization apply to businesses with at least 20 employees. Contributions to the Employees’ Provident Fund Scheme are obligatory for both the employer and the employee when the employee is earning up to INR 6,500 per month and voluntary when the employee earns more than this amount.

If the pay of any employee exceeds this amount, the contribution payable by the employer will be limited to the amount payable on the first INR 6,500 only. Contributions should be made to the Employees’ Provident Fund Organization on an annual basis. The Employees’ Provident Fund Organization includes three schemes:

The Employees’ Provident Fund Scheme, 1952
The Employees’ Pension Scheme, 1995
The Employees’ Deposit Linked Insurance Scheme, 1976

  • The Employees’ Provident Fund Scheme is contributed to by the employer (1.67-3.67 percent) and the employee (10-12 percent).
  • The Employee Pension Scheme is contributed to by the employer (8.33 percent) and the government (1.16 percent), but not the employee.
  • • Finally, the Employees’ Deposit Linked Insurance Scheme is contributed to by the employer (0.5 percent) only.


Four main types of pension (all monthly) are offered:

  • Pension upon superannuation or disability;
  • Widows’ pension for death while in service;
  • Children’s pension; and
  • Orphan’s pension.

In addition, there are separate pension funds for civil servants, workers employed in coal mines and tea plantations in the State of Assam, and for seamen.


India has a national health service, but this does not include free medical care for the whole population. The Employees’ State Insurance Act creates a fund to provide medical care to the employees and their families, as well as cash benefits during sickness and maternity and monthly payments in case of death or disablement for those working in factories and establishments with 10 or more employees.

In case of sick leave, the employer will pay half salary to the employees covered under the Employee’s State Insurance Act.


The Workmen’s Compensation Act requires the employer to pay compensation to employees or their families in cases of employment related injuries resulting in death or disability.

In addition, workers employed in certain types of occupations are exposed to the risk of contracting certain diseases, which are peculiar and inherent to those occupations. A worker contracting an occupational disease is deemed to have suffered an accident out of and in the course of employment and the employer is liable to pay compensation for the same. Occupational diseases have been defined in the Workmen Compensation Act in parts A, B and C of Schedule III.

Compensation calculation depends on the situation of occupational disability:

a. Death: 50% of the monthly wage multiplied by the relevant factor (age) or an amount of INR 80,000/- whichever is more.

b. Total permanent disablement: 60% of the monthly wage multiplied by the relevant factor (age) or an amount of INR 90,000/- whichever is more.

c. The Compensation Act also includes stipulations for partial permanent disablement and temporary disablement (total or partial).


For establishments with ten or more employees, the Payment of Gratuity Act requires the payment of 15 days of additional wages for each year of service to employees who have worked at a company for five years or more.


The Maternity Benefit Act requires an employer to offer 12 weeks wages during maternity as well as paid leave in certain other connected contingencies.

Every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage (the average of the woman’s wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she is absent on account of maternity), including the day of her delivery and for the six weeks immediately following that day.

The maximum period for which any woman shall be entitled to maternity benefit shall be 12 weeks, six weeks up to and including the day of her delivery, and six weeks immediately following that day.

During the one month proceeding the period of six weeks before her expected delivery or any period during that six week period for which she does not take a leave of absence, no pregnant woman shall be required by her employer to do any work that is arduous, involves long hours of standing or is in any way likely to interfere with her pregnancy or otherwise adversely affect her health.

Any woman working in an organization and allowed to maternity benefit may give written notice to her employer stating that her maternity benefit and any other benefits to which she may be entitled may be paid to her or to anyone she nominates in the notice, and that she will not work in any establishment during the period for which she receives maternity benefit.

On receipt of the notice, the company shall authorize the employee to absent herself from the company until the end of six week period following the day of her delivery.

The maternity benefit for the period preceding the date of her expected delivery shall be paid in advance by the company to the employee after having confirmed that she is pregnant. The amount due for the subsequent period shall be paid by the employer to the employee within 48 hours of the child’s birth.

In addition to the above, the act states that no company shall deliberately employ a woman in any organization during the six weeks immediately following the day of her delivery or her miscarriage. No company shall compel its female employees to do tasks of a laborious nature or tasks that involve long hours of standing or which in any way are likely to interfere with her pregnancy or the normal development of the foetus, or are likely to cause her miscarriage or otherwise adversely affect her health.

It is very important to understand the Social Security Systems for Effective Payroll Management. The latter should be developed keeping in consideration the former.

Payroll Management Systems are also significant for SMEs and Small Business for transparent and influencing Employer Branding. For better understanding on our Payroll Services, you can download the Free Guide to Payroll Management.

Get in touch with us now at or call up: +91-9599444630/9 to know more.

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