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MSME CONSULTING

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 

  1. Bank Loans (Collateral Free)
  2. Subsidy on Patent Registration
  3. Overdraft Interest Rate Exemption
  4. Industrial Promotion Subsidy Eligibility
  5. Protection against Payments (Delayed Payments)
  6. Fewer Electricity Bills
  7. ISO Certification Charges Reimbursement

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.

All about MSME.

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 

  1. Bank Loans (Collateral Free)
  2. Subsidy on Patent Registration
  3. Overdraft Interest Rate Exemption
  4. Industrial Promotion Subsidy Eligibility
  5. Protection against Payments (Delayed Payments)
  6. Fewer Electricity Bills
  7. ISO Certification Charges Reimbursement

 

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.

What are the responsibilities of the Companies after the Registration under the MSME Act?

The task does not end after you had the MSME Registration; there are certain compliances that need to be followed by the Specified Companies.

  • The specified Companies need to check whether their suppliers are registered under the MSME Act or not.
  • If they are registered under the MSME Act, the Specified Companies need to check if there is any due payment from their end for a period that has exceeded 45 days from the date of acceptance of the services or goods by such company. Also, the company has to mention their return if payment dues is not paid within the time frame

 

Issues MSMEs must tackle to ensure compliances

  • Organizational structure: It is important to have a good and organized structure for a business to make it successful. Many businesses lack either well-planned structure, skill, knowledge, administrative apprehension, or other additional compliance burden and do not get their businesses registered. Therefore, registration is required for the business so that the opportunities for the business opens up from the state and the central enterprises, they get the benefits from subsidies, higher tax rebates, easy access to investment or working capital.
  • Delayed payments: the problem of delayed realization of bills is faced by every organization. This becomes SMEs are facing excess financial constraints which is one of the major reasons for their consecutive failure of SME/Startup. Nonetheless, such companies must be aware that according to the MSME Act 2006, it is the obligation toward the companies who are taking services from SMEs player they have to clear their dues within the time period of 45 days so as to avoid heavy Interest in it.
  • Tax liability: the introduction of GST, has enhanced the ease of doing business for start-ups in India by bringing all state and central level levies and taxes under one cover but with that, it has also increased the high-pressure compliance on MSMEs.

What is the Due Date of MSME Form 1?

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

What is the Penalty for not complying with these standards?

Following are the penalties for not complying with these standards:

  • There will be a fine of INR 25000 with the Defaulter Company.
  • The concerned officer of the company will be liable for imprisonment up to six months, or there will be a fine from INR 25000 to INR 3, 00,000.

Basic Registration

INR 9,999/-

One Time Fee

  • Company Incorporation
  • PAN, TAN & GST, ESI, EPF
  • MSME Registration
  • Bank A/c.

Service Provide Within 7 Days

Standard

INR 19,999/-

One Time Fee

  • Company IncorporationPAN, TAN & GST, ESI, EPFBank A/cMSME

    Shop & Establishment

    Trade Mark

    Logo Design

Service Provide Within 15 Days

Premium

INR 15,000/- PM

Monthly Fee

  • Yearly Compliances
  • Accounting Service
  • GST Compliance
  • Income Tax Return
  • With one dedicated staff.
  • Subject to Turnover up to 2 Cr.

Services Provided Before the Due Date

Frequently Asked Questions

  • Any entrepreneur having a valid Aadhaar Number can apply for MSME Registration Online.

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.

  • Scheduled commercial banks have been advised in terms of our circular RPCD.SME&NFS. BC.No.102/06.04.01/2008-09 dated May 4, 2009, to put in place a non -discretionary one-time Settlement scheme duly approved by their Boards. The banks have also been advised to give adequate publicity to their OTS policies.

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