The role of professional Chartered Accountants in the Start-Up Scheme
The role of professional chartered accountants in the start-up scheme launched by our Prime Minister is essential, vast and comprehensive. As the partners in nation building it is undoubtedly not only an opportunity in professional domain but it is also a responsibility for interest in large. As we see that the growing complexity has made the business atmosphere comparatively difficult in terms of identification of potential grey areas in which most of the start-ups might find themselves in.
The reason is that the start-ups that we are talking about are conventionally not Involved in normal routine trading activities but are mainly involved in e-commerce activities.
So now it is essential to measure and understand how can chartered accountants justify and help entrepreneurs in making sure that the venture results into a profitable and successful adventure. So, let us start with few points that are relevant for our discussion.
We know that chartered accountants are professionally trained tax professionals. The fact that taxation is one of the main areas which are start-up faces beyond the fundamental areas of finance and fundraising is one of the criteria why chartered accountants play a significant and crucial role to help smoothen the business operations.
We know that most of the transactions in start-ups specially in the start-up is the e-commerce player requires a complete an exhaustive structuring in terms of the taxation and the relevant events that an company faces. Hence the relevancy of a person well equipped with the tax laws whether it may be direct taxation, indirect taxation or any other tax involved.
Chartered Accountants are trained professionals who work in the finance field. For start-ups undoubtedly one of the most key areas still remains to be fundraising and Managing their capital. It is a difficult job to ensure the important expenses are being met off at the same time the startup remains in a situation which is manageable in terms of financial profitability.
In such a situation there are very important areas to manage in terms of the working capital and the core seed capital of the start-up. Now here how can chartered accountants play a crucial role is important to understand. I see personally that there are two key areas that to look for, one that one must manage the banking affairs of the organisation in regard to financial needs like the banking overdraft etc, second is broader activity of raising capital either by venture capitalists, angel networks or by banking networks.
Chartered accountants need to equip themselves & understand how the process works and accordingly act as an interface for the promoters and the venture capitalists. Undoubtedly the promoters know more and will always continue to know more in terms of their business but chartered accountants understand the numbers better than anyone else does and hence can always be back end support for such promoters to give a good presentation and a good grasp of the affairs of the organisation with a potential investor.
Chartered accountants along with other professionals like company secretaries are specialists in the matter of secretarial compliances. As start-up generally are in the form of a registered company ensuring the compliances of companies act 2013 is of high relevance. Now the companies act 2013 is an Act full of complexities and jargons which are changing every day and the notifications are coming very frequently that are resulting into changing of the law every next day or two. The penal consequence is the act are significant and start-ups cannot afford to miss the compliances which are relevant to be duly complied with.
Being professionals it is the role of chartered accountants, company secretaries and cost accountants to ensure that the start-ups are able to comply and adhere to the norms laid down by the companies act 2013.
We know that recently our Prime Minister have launched a start-up scheme for developing and promoting start-ups in India. A lot of of tax benefits and other key liberalisations have been offered these start-ups to ensure that the country booms with start-ups and the economic growth following it.
The income tax benefits, the tax holiday period benefits, the freedom from inspector raj, the reduction in the cost of patenting, digitalisation, smoother incorporation and number of other matters will require a clear due diligence before it is implemented in the start-up.
Every single impact and every single assessment can be clearly passes by chartered accountants domain and should be readily dealt by them. For example, whether a start-up is eligible to enter into this start-up scheme shall be a chartered accountants domain. Next, if the start-up is available then the certification required to enter into this start-up scheme should again be another domain. And the list continues.
The concept of virtual CFO
Most of us understand the concept of virtual CFO. For those who do not understand I would like to discuss here. Now, why is this relevant for us. The relevancy is because the start-ups are generally coming from people who are not of finance background. They might be engineers or doctors or any other professionals with a brilliant idea and the passion to convert this idea into a successful start-up.
In such a scenario chartered accountant can actually handle and operate just like Chief financial officer of the start-up and ensure complete ad hoc and bird eye view of the complete entity. His role shall be to understand the areas of non-compliances and ensure effective addressal of the matter if so required.
Compliance check up
In this modus of operation instead of choosing a full-time or part-time compliance officer one can appoint a chartered accountant to do the compliance audit of the organisation and identify key areas of noncompliances which should be addressed and immediately worked upon.
A chartered accountant is in a situation to best understand and identify what are the areas which will require a addressable and attention before the company can be presented to a venture capitalist for the infusion of funds.
Other Areas can be :-
- Business Structuring
- Compliance Briefing
- Internal Audits
- Statutory Audits
The potential of the start-ups in India is huge and magnanimous in times that are testing in terms of the economic movements globally and India undoubtedly remains to be one of the places which may get a lot of attention in terms of the start-up capacity of the country. With the potential comes a lot of problems and also a lot of challenges which are required to be duly met and dealt with and the country's professionals are the most expected professionals who equip themselves with that amount of knowledge which is required to address the situation. Hence in light of the same it is the chartered accountants of the country who are also required to equip themselves with each and every single development part of start-up scheme to ensure that our Prime Minister’s dream vision of making India a start-up domain of the world becomes a true success. It is the professional grade of the country which has always led the way for all the problems and challenges and will continue to lead. I am personally always bullish on the Indian professionals and on the Indian start-ups.
About the Author:
CA Ankit Gulgulia (Jain)
Author is Practicing Chartered Accountant in New Delhi/NCR and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at firstname.lastname@example.org.
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