Starting a company is exciting — but many founders in India overlook crucial compliance obligations in their early days. These lapses can lead to ROC penalties, delayed funding, or even the suspension of business operations.

In this guide, we’ll uncover the most common startup compliance mistakes in India and provide practical solutions so you can stay legally secure and investor-ready.

Ignoring Post-Incorporation Compliance

Once your company is registered, it’s essential to complete all post-incorporation compliances such as board meetings, auditor appointment, and statutory filings.

Neglecting these steps is one of the most frequent startup compliance mistakes in India, as it attracts hefty fines from the Registrar of Companies (ROC).

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Tip: Always appoint an auditor within 30 days of incorporation and file Form ADT-1 with the MCA.

Delayed ROC Filings

Many startups fail to submit Annual Returns (Form MGT-7/MGT-7A) and Financial Statements (Form AOC-4) on time.

The ROC imposes penalties of ₹100 per day for every delay — with no upper limit.

👉 Explore our ROC Filing Services Guide to avoid unnecessary fines.

Tip: Maintain a compliance calendar to track all annual and event-based filings.

Not Maintaining Proper Accounting and Tax Records

A large number of startups overlook basic accounting protocols, leading to mismatched financials and income tax scrutiny. Maintaining clean records helps in audits, funding rounds, and ROC compliance.

Tip: Outsource bookkeeping and taxation to professionals or hire Virtual CFO Services for continuous oversight and financial compliance.

Non-Compliance with GST and Other Tax Registrations

If your turnover exceeds the GST threshold limit (₹40 lakh for goods or ₹20 lakh for services), registration under GST is mandatory.
Failure to register or file GST returns on time can result in penalties and suspension of GSTIN.

Tip: File GST returns monthly or quarterly, depending on your business type, and reconcile invoices regularly.

👉 Know the complete process here: GST Registration and Filings in India – Complete Guide

Ignoring Statutory Registers and Documentation

Under the Companies Act, 2013, every company must maintain statutory registers such as:

• Register of Members
  
• Register of Directors
  
• Register of Shareholders
  

Failure to maintain these records can cause compliance issues during audits or due diligence rounds.

Tip: Use digital record-keeping tools and ensure all statutory books are updated after every major business event.

Overlooking Event-Based Compliances

Event-based filings like change of directors, allotment of shares, or change in registered office must be reported to the MCA using specific forms (DIR-12, PAS-3, INC-22).

Ignoring them can cause discrepancies in your MCA records and delay business operations.

Tip: Partner with compliance experts for periodic reviews of your ROC status.

Missing Out on Key Statutory Filings (DPT-3, MSME-1, INC-20A, DIR-3 KYC)

Apart from regular ROC filings, several mandatory forms are often missed by startups — resulting in hefty fines:

• Form DPT-3 – For reporting loans or advances not treated as deposits.
  
• Form INC-20A – Declaration of commencement of business (mandatory for all companies after incorporation).
  
• Form DIR-3 KYC – Director KYC to verify active DIN status annually.
  
• Form MSME-1 – For companies with outstanding payments to MSME vendors beyond 45 days.
  

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Tip: Create a checklist for all due forms and verify each submission before the deadline.

Missing SFT Filing, FLA Filing, and TP Audit

Startups with foreign investments, large financial transactions, or cross-border dealings have additional compliance responsibilities. These are often ignored by early-stage founders but are critical for financial and legal integrity.

a. SFT (Specified Financial Transactions) Filing

Every company or startup engaging in high-value financial transactions must submit SFT filings under the Income Tax Act.
Missing this can trigger tax scrutiny or penalties.
👉 Read here: SFT Filings in India – Complete Guide

b. FLA (Foreign Liabilities and Assets) Filing

If your company has received foreign investment (FDI) or made investments abroad, you must file FLA returns annually with the Reserve Bank of India (RBI).

👉 Get full details here: FLA Filings in India – Annual Compliance for Companies with Foreign Investments

c. Transfer Pricing (TP) Audit

Startups dealing with related party transactions (especially foreign entities) must conduct an annual TP audit under the Income Tax Act.
This ensures that international transactions are conducted at arm’s length and prevent disputes with tax authorities.

Tip: Consult a compliance expert or Virtual CFO to manage SFT, FLA, and TP filings accurately.

Final Thoughts

Compliance mistakes are costly but completely avoidable. By partnering with professionals offering Compliance Services or Virtual CFO Services, startups can focus on growth instead of paperwork.

Avoiding ROC penalties and ensuring company law compliance not only keeps your startup safe but also builds investor confidence and long-term credibility.

👉 Get end-to-end startup compliance assistance from The StartupLab and ensure your company stays 100% compliant with ROC, MCA, and tax regulations.