2016-04-05 00:00:00Money & FinanceEnglishhttps://quickbooks.intuit.com/in/resources/in_qrc/uploads/2017/05/Money-and-Finance-Accounting-for-your-CSR-initiatives.jpghttps://quickbooks.intuit.com/in/resources/money-finance/corporate-social-responsibilities-initiatives/Accounting For Your CSR Initiatives

Accounting For Your CSR Initiatives

2 min read

India is essentially a capitalist economy thriving in a socialist set-up. This has in fact led to a directive for all eligible companies to spend at least 2% of their average 3 year net profit to fulfill their corporate social responsibilities (CSR). Companies that are considered as eligible must have one of the following:

  • a net worth of Rs 500 crore
  • turnover of Rs 1000 crore
  • net profit of at least Rs 5 crore

Such companies have to comply with the CSR norms. While, it is mandatory for you to comply with the regulation, CSR initiatives are essential to building your brand image. Investing in corporate social responsibilities initiatives will ensure assured growth for your business by adding credibility to your company. Owing to these initiatives, you will also land up paying less in taxes. Now that we have covered the advantages of pursuing corporate social responsibilities initiatives – let’s discuss how we can get the best benefits by maintaining proper accounting practices for the same. Keep track of rebates or tax exemptions that you can claim by investing in CSR: Investing in CSR makes you eligible for tax exemptions and rebates. You need to ensure that you keep track of such exemptions and avail them wherever possible. Here, it is important to note that – your investment in CSR (if it exceeds the required amount), for a particular year, cannot be carried forward in the following fiscal year. Keep track of every penny you spend: As a startup, it is essential for you to understand where you money is going – how is it aiding the growth of your company? This means this you have to be able to access the financial benefits that you are getting out of investing in a particular corporate social responsibilities initiative. The questions that you need to ask is – Is it improving your brand value? Is it improving your credibility? Most importantly, are you getting business owing to this credibility or brand image? If a particular CSR initiative is costing you more than the amount of benefits you are getting from it – it is a good idea to not pursue it. As a startup you can’t afford any leakage. Hire a good Chartered Accountant: Your requirement is social accounting and it is essential that you hire someone who can do it well, for you. Any changes in regulation by the Government of India will affect your investment in corporate social responsibilities . Ensure that you keep track of any such changes in regulation. These guidelines will help you maintain your accounts for your CSR initiatives. As a startup, you should be able to strike a balance between building your brand image and investing enough in corporate social responsibilities without making losses. Maintaining proper accounts will considerably improve your brand image as well as save your cash reserves to invest in future ventures.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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