MSME OVERVIEW
Small and medium enterprises (SMEs) are the foundation of the Indian economy. Despite this success of SMEs, Due to the current economic crises, SMEs are facing securities pressure. SMEs need to improve the performance, the scale of business, new business idea, and optimization of business e in providing relevant expertise and consultation, particularly those in the Small and Medium Accounting Practices (SMPs) as well as Professional Chartered Accountants in Business who are dealing many SMEs. SMPs, experts are involved in assisting the SMEs in their compliance with accounting, taxation, and other regulatory requirements so that SMEs are focus on their business strategy.
Advantage of MSME in India OR Benefit of taking registration of MSME
DISADVANTAGE OF MSME LOANS
ACCUMULATE OF INTEREST
The first disadvantage in MSME for SMEs is the interest amount payable once the loan is sanction. Interest to be paid is accumulated fast just in case of loans. However the rate of interest on MSME loan is much less as compared to the other Business loans, the interest accumulates rapidly and takes away a significant amount of money paid. Such a type of liability does not occur within the case of angel investment or bootstrapping
LONG PROCEDURE WHILE APPLYING OF LOANS
Although the proportion of approval of the loan is high and the procedure of sanctioning may be a tedious and long process. A lot of documents have been asked during the MSME loan application procedure and verification process. This makes the whole process very long and tiring. Documents such as income tax returns, profit and loss statements, and bank account details, bills of receipt and payment, and a lot of other papers are asked to prove the credibility of the lender.
NO COLLATERAL REQUIREMENT
Though this is often a plus point for the lenders, this might become problematic to the banks. As the government is providing loans without collateral but banks always give loans with collateral so the loan becomes secured. It is secured in the sense that if a bad debt occurs, the financial institution does not suffer any loss. However, most the MSME do not have any collateral securities so they required loans without collateral securities, and this makes them insecure and unstable for banks. And this is a chance of increase NPA.
PROCESSING FEES
The loan processing fee is also an extra burden that is to be paid by the entrepreneur/startup /SME borrower before sanctioning the loan. But on other hand in angel investment and funding it is not required to be paid.
THE WHOLE AMOUNT IS NOT PROVIDED
Generally, a 50 to 60 % loan is sanctioned to the requirement. To SMEs full amount of loan, not sanction. Therefore, the Application of loans & its sanction does not mean or guarantee that everything will go as per the plans.
HIGH CREDIT SCORE
If SME’s credit score is high then, most of the loans do not require collateral. It depends on the requirement of verification of the credit score of the applicant by the banks and other lenders. Therefore, individual SMEs whose credit scores are not good and not fulfill the requirement of the bank then they cannot apply for a loan at all.
Compliances for MSME
MSME Form 1 is a mandatory compliance for the specified companies which are defined in Section 9 of the MSMED (Micro, Small and Medium Enterprises Development) Act. Some specified companies that are dealing with MSMEand have outstanding more than 45 days are required to file the MSME Form 1 on a. half-yearly basis to the MCA (Ministry of Corporate Affairs).
What is the Return Periodicity of MSME Form 1?
Some specified companies who are dealing with MSME and have outstanding more than 45 days are required to file the MSME Form 1 on a. half-yearly basis to the MCA (Ministry of Corporate Affairs) on the yearly return on a half-yearly basis to the Registrar concerning the outstanding payments to the Micro, small and medium enterprises which contain the following information:
• The amount of payment due;
• The reasons for the delay.
Business Advisory Services to SME
Accounting services are one of the Business Advisory Services/business implementations services that are the root of business sometimes referred to as non-audit services. Non-audit services generally refer to the services including GST Implementation accounting service tax advisory service which above and beyond the related audit services
Accounting services and functions are a very important role to SMEs because they can provide them better management control, internal control and assist in decision-making, helping them to access new market domestically and abroad and maximize profits in the corporate world and nowadays the accounting software is easy to use and its usage has facilitated their financial management and companies’ accounts because that software has had a positive impact on their businesses and this statement also agree from that the outsourcing of accounting function has a significant impact on the performance of the SMEs.
Services Needed by SMEs
Smoothly accounting setup
Manage Human resource management
Tax advisory services
Project financing service
Auditing services
All Legal compliance for running the business.
MSME OVERVIEW
Small and medium enterprises (SMEs) are the foundation of the Indian economy. Despite this success of SMEs, Due to the current economic crises, SMEs are facing securities pressure. SMEs need to improve the performance, the scale of business, new business idea, and optimization of business e in providing relevant expertise and consultation, particularly those in the Small and Medium Accounting Practices (SMPs) as well as Professional Chartered Accountants in Business who are dealing many SMEs. SMPs, experts are involved in assisting the SMEs in their compliance with accounting, taxation, and other regulatory requirements so that SMEs are focus on their business strategy.
Advantage of MSME in India OR Benefit of taking registration of MSME
DISADVANTAGE OF MSME LOANS
ACCUMULATE OF INTEREST
The first disadvantage in MSME for SMEs is the interest amount payable once the loan is sanction. Interest to be paid is accumulated fast just in case of loans. However the rate of interest on MSME loan is much less as compared to the other Business loans, the interest accumulates rapidly and takes away a significant amount of money paid. Such a type of liability does not occur within the case of angel investment or bootstrapping
LONG PROCEDURE WHILE APPLYING OF LOANS
Although the proportion of approval of the loan is high and the procedure of sanctioning may be a tedious and long process. A lot of documents have been asked during the MSME loan application procedure and verification process. This makes the whole process very long and tiring. Documents such as income tax returns, profit and loss statements, and bank account details, bills of receipt and payment, and a lot of other papers are asked to prove the credibility of the lender.
NO COLLATERAL REQUIREMENT
Though this is often a plus point for the lenders, this might become problematic to the banks. As the government is providing loans without collateral but banks always give loans with collateral so the loan becomes secured. It is secured in the sense that if a bad debt occurs, the financial institution does not suffer any loss. However, most the MSME do not have any collateral securities so they required loans without collateral securities, and this makes them insecure and unstable for banks. And this is a chance of increase NPA.
PROCESSING FEES
The loan processing fee is also an extra burden that is to be paid by the entrepreneur/startup /SME borrower before sanctioning the loan. But on other hand in angel investment and funding it is not required to be paid.
THE WHOLE AMOUNT IS NOT PROVIDED
Generally, a 50 to 60 % loan is sanctioned to the requirement. To SMEs full amount of loan, not sanction. Therefore, the Application of loans & its sanction does not mean or guarantee that everything will go as per the plans.
HIGH CREDIT SCORE
If SME’s credit score is high then, most of the loans do not require collateral. It depends on the requirement of verification of the credit score of the applicant by the banks and other lenders. Therefore, individual SMEs whose credit scores are not good and not fulfill the requirement of the bank then they cannot apply for a loan at all.
Compliances for MSME
MSME Form 1 is a mandatory compliance for the specified companies which are defined in Section 9 of the MSMED (Micro, Small and Medium Enterprises Development) Act. Some specified companies that are dealing with MSMEand have outstanding more than 45 days are required to file the MSME Form 1 on a. half-yearly basis to the MCA (Ministry of Corporate Affairs).
What is the Return Periodicity of MSME Form 1?
Some specified companies who are dealing with MSME and have outstanding more than 45 days are required to file the MSME Form 1 on a. half-yearly basis to the MCA (Ministry of Corporate Affairs) on the yearly return on a half-yearly basis to the Registrar concerning the outstanding payments to the Micro, small and medium enterprises which contain the following information:
• The amount of payment due;
• The reasons for the delay.
Business Advisory Services to SME
Accounting services are one of the Business Advisory Services/business implementations services that are the root of business sometimes referred to as non-audit services. Non-audit services generally refer to the services including GST Implementation accounting service tax advisory service which above and beyond the related audit services
Accounting services and functions are a very important role to SMEs because they can provide them better management control, internal control and assist in decision-making, helping them to access new market domestically and abroad and maximize profits in the corporate world and nowadays the accounting software is easy to use and its usage has facilitated their financial management and companies’ accounts because that software has had a positive impact on their businesses and this statement also agree from that the outsourcing of accounting function has a significant impact on the performance of the SMEs.
Services Needed by SMEs
Smoothly accounting setup
Manage Human resource management
Tax advisory services
Project financing service
Auditing services
All Legal compliance for running the business.
Problem Statements
The lack of managerial capabilities,
Lack of financing and human resources management
Lack of accounting expertise
Lack of marketing knowledge
The lack of expertise becomes advantageous to SMPs to extend their services into advisory and consulting services to the business needs of the SMEs especially under the manufacturing services
The role of accounting services among SMEs in the manufacturing sector. It will provide the systematic process accounting that determines and identify the service quality factor between professional charred accountants and SMEs in a business advisory from the manufacturing sector.
The task does not end after you had the MSME Registration; there are certain compliances that need to be followed by the Specified Companies.
Issues MSMEs must tackle to ensure compliances
All the specified companies are required to file the yearly return on a half-yearly basis. These companies need to file in the MSME Form 1 stating the outstanding dues to the Micro Small and medium enterprises suppliers within 30 days from the date of the publication of the notification specifying the order to perform the same.
Extension of the Due Date
The Ministry Of Corporate Affairs on February 21st, 2019 states that the date of filing the MSME Form 1 will be calculated from the time the form is deployed on the MCA 21 Portal.
Period of Return: | Date of Filing |
April to September | 31st October |
October to March | 30th April |
Following are the penalties for not complying with these standards:
One Time Fee
Service Provide Within 7 Days
One Time Fee
Shop & Establishment
Trade Mark
Logo Design
Service Provide Within 15 Days
Monthly Fee
Services Provided Before the Due Date
In the interest of the environment, no physical copy of the MSME Certificate will be issued. The government believes in paperless work.
After data verification of the MSME application form, MSME Registration Certificate will be issued within 24 Hrs. at registered email address.
The Ministry of MSME implements the scheme of Information and Communication Technology (ICT) to encourage and assist Indian MSEs to adopt and implement ICT Tools and Applications for the smooth running of their production and business processes which help them to improve their productivity and competitiveness in National as well as in International Market.
Yes, you can but it’s a lengthy process it is better to link Aadhar card with an active mobile number to get MSME registration certificate instantly