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Annual Compliance of Limited Liability Partnership firm
A Limited Liability Partnership or LLP enjoys a separate status in the business market. Therefore, an organization requires to maintain its active status by filing the annual compliance with the Ministry of Corporate Affairs (MCA) on a regular basis. Annual compliance filing of LLP is necessary, whether the business is operating or not. Annual compliance for LLP needs filing two separate forms, one is for Annual Return and another one is for the report of Accounts and Solvency.
The forms are submitted for reporting the business activities and financial data for every upcoming financial year. If the LLP fails to file the Annual Compliance requirements leads to an additional or penalty fee of ₹ 100 every day for the delay till the actual date of registering. Thus, apart from the authorization, the heavy penalty obliges the Designated Partners to fulfil the needs and requirements.
Benefits of Annual Compliance of LLP
Record of Financial WorthThe forms filed by Limited Liability Partnership are approachable by companies. Therefore, while entering into major projects or contracts, the authorized party may also visit or audit the financial worth. LLP annual filing submits the record of financial worth of the company and capacity to an interested individual or party.
Higher CredibilityFormal compliance is a basic requirement for any entity or business. The status of Limited Liability Partnership annual filing is exhibited at the Master Data of the LLP on MCA portal and the same can be obtained by any individual. Annual compliance is a major criterion to evaluate the credibility of the business entity for any loan approvals or any other same kind of requirements.
Easy conversion and closureAnnual filing is mandatory for the conversion of the LLP into any other type of company or organization. The regular compliance reports ease the conversion process. The same employ in case of closure of an LLP firm. Even if the LLP was not working, the Registrar may demand to file the annual compliance, along with the LLP filing fee, if needed.
Maintain active status and avoid penaltiesIn case of back-to-back default in the annual filing, the Limited Liability Partnership can be announced as defunct or obtain default status. Also, the partners can be announced as defaulters and also can be disqualified from their farther appointment in LLP or any other company. Thus, it is mandatory to file the annual return to maintain the active status of the LLP. Filing the annual returns also saves the LLP from heavy penalties and additional fees.
Protection of LLP or Limited Liability PartnershipDo you know: Checklist details for Filing of Annual Compliance
Significant Advantages: Powers enjoyed by Limited Liability Partnerships are as follows:
- Abilities to sue and be sued.
- Have the powers to employ individuals.
- The associates have the power to keep business activities directly.
- Hold the power to indulge into all types of legal agreements.
- In an LLP, one partner is not answerable or liable for another partner’s negligence or misbehaviour.
- Can open a bank account.
- An LLP provides limited liability security for the partners.
- If there is only one member in the company, there is time to get a new one outwardly, and without the dissolving of the Limited Liability Partnership also.
- If the number of Partners step-downs less than 2, the sole associate can still find a new companion to fill the partner’s space.
- LLPs can hold assets and accounts which are separate from that of the supporters or promoters.
- An LLP can have limitless associates while the Post establishment.
- LLP is a separate legal existence.
- An LLP has the power to raise the funds from Banks, Partners, and NBFCs.
Checklist for Filing of Annual Compliance of LLP
- Annual returns need to be submitted with the Registrar of Companies (ROC).
- Annual returns of the LLP to be accompanied and filled up under the prescribed format of Form 11
- Annual returns have to be filed within 2 months or 60 days from the close of the year. This could be filled on the 30th of May of every year.
- The annual compliance should be met by every registered LLP, even if there is no business activity. It has to be obtained if the LLP has been closed down or even not a business bank account exists..
Documents required for Annual Filing of Compliance for LLP
- Certificate of Incorporation and PAN card of LLP
- The LLP Agreement along with any report or agreement, if any
- Financial report or Statement of LLP duly signed by the assigned partners
- DSC of all assigned partners is needed
- Identification Number of LLP
- Name of the LLP as a Proof of Title
- Principal business endeavours of the LLP
- Registered office address and Business classification of the LLP
- Total responsibility for the contribution of partners of the LLP
- Aspects of assigned Partners and Partners of the LLP
- Review of Designated Partners and Partners
- Total input supported by all partners of the LLP
- Details of penalties imposed on the LLP, if any
- Facts of intensifying offences, if any
- Features of LLP or company in which Partners hold the position of Director or Partner.
Annual Filing of LLP
Unlike all types of Companies, LLP also mandatorily have to record their financial year, as April 1st to March 31st of every year. Thus, the due of LLP annual return is on May 30th and the due of report of Account & Solvency is on October 30th of every financial year. Apart from the MCA annual return filing, LLPs must also mandatorily file IT returns each year.
LLP Form 8
Form 8 should be filed within a month or 30 days from the end of 6 months of the year with some specified fee. This form should be signed digitally by 2 designated partners of the company and it should be certified by an authorized chartered accountant or company secretary or cost accountant. Form 8 contains Statement of Solvency, Statement of Income & Expenditure and Statement of Accounts
LLP Form 11
Form 11 holds information of the number of partners, total contribution received by all partners, total number of partners, information of body corporate as partners and complete summary of partners. All LLPs must file this form within two months or 60 days from the closure of the every financial year with the specified fee. Hence, the filing LLP Form 11 due is on 30th of May every year.
Income Tax Return Filing
LLPs should file IT returns with Form ITR 5. This form can be filed online by visiting the official website of the income tax department utilizing the digital signature certificate of the designated partner of the LLP. If tax audit is not required, the LLP can file the tax on July 31st and for LLP whose contribution exceeded Rs. 25 Lakh or whose turnover exceeds more than Rs. 40 Lakh are needed to get their accounts statements audited by an authorized Chartered Accountant. The deadline for tax filing for LLP needs to get an audit is September 30th.
LLP Tax Audit
LLP is a separate legal entity and it is completely responsible of the Designated Partners to maintain a proper report of accounts and file annual returns to the MCA every financial year. There is no need to audit the accounts unless the concerned LLP’s annual turnover exceeds more than Rs.40 lakhs or if the contribution is more than Rs.25 lakhs.
Frequently Asked Questions
There are 3 essential compliances needed for LLP compliances every year..
- Annual Return
- Financial reports or Statements of the LLP
- IT Returns Filings.
The LLP whose annual turnover exceeds more than Rs. 40 lakhs or whose LLP capital contribution exceeds more than Rs. 25 lakhs
if the status is SRN or ‘Sent for Resubmission, you are required to submit your E-Form again to correct or edit the incompleteness pointed out by the concerned MCA office.
Each LLP has to submit LLP Form 8 every year, and it is known as “Statement of Accounts and Solvency”, it contains the details related with financials of LLP such as asset-liability etc.
You can complete the Company registration process within 15-35 working days after you have submitted all your needed documents..
