Financial aspects

and labour laws

Name:- Shreya Sood

Branch:- Mtech CSE
Roll No:- 1805795
 Financial aspects
Finance is a business function that uses numbers and
analytical tools to help managers make better decisions.
Every business owner must learn at least basic finance
principles to effectively run his company. Finance helps
management gain a clear understanding of the company’s
current financial position, particularly whether the
business is profitable or not. Companies of all sizes
benefit from thorough financial planning to guide the
business steadily down the path to future growth.
 Profit and Loss: Your profit and loss statement
summarizes your company's financial activity during a
period of time, such as a month or a year. It lists all of
your revenue at the top and all of your expenditures in
the lower section, breaking these into variable expenses,
such as materials and production payroll, and fixed costs
such as rent. The bottom line of your income statement
shows how much you earned or lost during that financial
periods.

 Balance Sheet: Your balance sheet is an overview of

your financial situation at a particular moment in time,
showing how much you own and how much you owe. It
also shows how these assets and liabilities are
distributed and how much of your cash is liquid and can
be easily available for emergiency purposes.
 Pro Forma Cash Flow: This document lays out your
financial projections for an upcoming period,
specifically showing how much cash you expect to be
flowing in and out of your operation during this time. By
figuring out when cash will be abundant and when it
will be tight, you can develop a plan for saving
proactively and also bridging the gaps.
 Forecasting And Planning
During the planning process, management determines
numerical goals for the upcoming 12 months, or in the
case of a long-range plan, for three years or more.
Company management then maps out the actions that
need to be taken, and the timeframe, for the goals to be
reached. Finance comes into play when the action steps
are converted to forecast numbers for revenues and
expenses. Managers with financial planning expertise
are able to create forecasts that are attainable yet
aggressive. They must also have sufficient
understanding about company operations to build
spreadsheet financial models based on assumptions that
are realistic.
 Accounting And Measuring Results
Accounting is the branch of finance responsible for recording
financial data and generating financial statements that show the
company’s operating results, as well as other critical functions
such as tax compliance. Accounting has its own set of rules and
standards for the recording of financial information and the
presentation of results, called Generally Accepted Accounting
Principles, or GAAP. Strict compliance with the standards allows
company management to be assured the statements they receive
are complete and accurate. Finance goes one step further and
interprets the results. Variance analysis is done to compare actual
results to forecast and uncover the reasons for negative or positive
deviations. Finance staff members compare the company’s
financial results to those of other companies in the industry to see
whether the company is performing above or below average,
compared with its peers.
 Monitoring Cash Position
All businesses, particularly smaller ones that do not
have large cash reserves or borrowing capacity, must
always keep an eye on their cash position -- the inflows
and outflows of cash. The finance department is
charged with forecasting cash flow to prevent
potentially disruptive shortages of cash. In a small
company this can mean serious problems, such as not
being able to pay employees at the end of the week.
Investing surplus cash to achieve a maximum return is
also part of the finance function. In larger companies
these investment activities take place on a daily basis
and involve constant monitoring of the financial
markets to select the best investments for such things
as the company’s employee retirement plan.
 Analysis for Decision Making
Finance can be likened to a toolbox for company
management to use. The tools help answer questions
that management must address when making small and
large decisions. A small decision might be whether to
lease or buy a new copy machine. A large decision for
which finance provides guidance could be whether to
acquire a competitor in order to grow the company
more quickly. The goal of the data gathering and
sometimes complex financial modeling utilized in
finance is to ensure the company makes the most
efficient use of its finite resources, including the
capital, human resources and productive capacity.
 Labour law
 Labour law is the area of law most commonly relating
to the relationship between trade unions employers and
the government.
 Labour law is concerned with the establishment of a
labour-relations framework that provides for orderly and
peaceful industrial relations between employers and
organized workers, and usually includes rules on
forming a union, conditions under which the union
becomes bargaining agent, strikes and lock-outs, process
for negotiations, and other structural elements that then
permit the employer and the union to bargain a
collective agreement and fill-in the rest specific to rules
and conditions relating to the workplace.
6 Key Labour Laws for Indian Small
Businesses
Whether you’re getting ready to hire your first
employee or expand your business with new workers,
you may want to spend some time reviewing labour
laws before you take the plunge. Unions and states
have dozens of laws designed to protect employees,
and familiarity with the ones that affect your business
helps protect your bottom line. These are some of
the most common labour laws you should know.
1) Anti-Discrimination Laws

Under the Equal Remuneration Act of 1976, you can’t

discriminate based on gender whether you’re
recruiting or have already hired a worker. For instance,
if you’re thinking about promoting one of your
employees, you can’t legally avoid choosing a female
employee just because of gender. Additionally, the
constitution bans discrimination based on race,
religion, caste, and place of birth. If your employees
believe you’re being discriminatory, they have the
right to file a complaint with the labour courts.
2) Maternity Leave

If you have female employees who’ve worked at least

80 continuous days during an accounting year, they’re
entitled to paid maternity leave for 12 weeks. Under
the Maternity Benefits Act of 1961, mothers are
entitled to 12 weeks paid maternity leave, and they
can start their leaves six weeks before their due dates.
During leaves, you have to pay these women their
usual daily wages, and if you don’t offer pre- or post-
natal care, you may also have to issue them medical
bonuses. Most importantly, you can’t dismiss women
on maternity leave or change their employment terms.
Women may also take a paid month off if they suffer
an illness related to pregnancy or in instances of
premature childbirth. In the case of miscarriage, she is
also entitled to six weeks off and up to two weeks off
for tubectomy operations.
3) Notice of Termination
You can dismiss employees for misconduct at any time,
but you should hold a disciplinary proceeding first so
your employees can defend their position. In cases
where misconduct isn’t involved, you must give the
employee notice. Most states require employees be
notified of their dismissals at least a month in advance,
but if your employee’s contract demands a longer time
frame, you have to keep that in mind.
After the dismissal, you can require employees to go
through a “garden leave,” which means they get paid but
don’t have to come to work. As of 2018, when you
dismiss an employee, you have to pay for the notice
period. Additionally, if the employee earns less than INR
21,000 per year, you have to pay a statutory bonus. Also,
workers who’ve been with you for five continuous years
get a gratuity. This means they get 15 days in wages for
every year they’ve been with your company, and partial
years count as full years if they run over six months.
4) Employee Privacy

When you’re recruiting employees, you have the right to

do background checks on them. But once you hire
workers, you have to let them know about any
information you hold on them and provide copies on
request. Beyond that, you must also store all employee
data safely and have a documented security program in
place.
Although your employees are entitled to privacy with
their personal communications, you have the right to
monitor all official emails, phone calls, and computer
usage.
Ideally, you should outline your policies in your human
resources documents so your employees know what to
expect. Similarly, the law also allows you to craft a
policy banning your employees from posting derogatory
statements about your company on their social media
profiles.
5) Worker Rest

If you want your employees to give you their best

efforts, you need to give them time to rest, and in fact,
the law requires you to give 12 paid days off to every
employee who works at least 240 days per year. In
particular, you must award your workers one day of
leave for every 20 days of work, and if you have
workers under the age of 15, they earn a day off for
every 15 work days.
If your employees don’t take all their leave days, you
must roll unused days into the next year, but you only
have to do this for a maximum of 30 days. On top of
those days off, employees get paid days off for Republic
Day, Independence Day, and Mahatma Gandhi’s
birthday.
6) Overtime Pay

When your employees work over a certain amount of

hours, you must pay them overtime. The threshold varies
based on the industry, but in all cases, the overtime rate is
two times the worker’s usual hourly rate. The law also
requires you to track the overtime hours, and you can
simplify that process by using a time tracking system or
app that syncs with your QuickBooks accounting
software. Doing so saves you time and helps you stay on
top of your records.
To learn more about labour laws, contact an employment
lawyer or employment litigation firm. These lawyers can
help you understand your obligations and ensure you’re
ready to take on extra help. You may also want to choose
apps and tools to help you with the compliance and
record-keeping aspect of India’s labour laws.
THANKS