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A Limited Liability Partnership is a distinct legal entity; the LLP’s partners are responsible for maintaining an accurate book of accounts and also for filing LLP annual returns with the MCA in Bengaluru each year. Mandatory Annual Compliance for Limited Liability Partnership (LLP) in Bengaluru – important compliances.

Annual Compliance for LLP in Bengaluru

As the name implies, yearly compliance for LLP in Bengaluru is the compliance that is required to be filed annually. Each private limited business is required to submit certain information, such as financial accounts or details of loans, as well as information about each shareholder and director, using the authorised forms. A limited liability partnership (LLP) is a type of partnership in which some or all partners have limited responsibility (depending on the state). A limited liability partnership agreement is any written agreement between the limited liability partnership’s partners or between the limited liability partnership and its partners that specifies the partners’ mutual rights and obligations, as well as their respective rights and obligations with respect to the limited liability partnership.

 

Benefits of Annual Compliance for LLP

There are several reasons why many businesses prefer to incorporate a Limited Liability Partnership (LLP) rather than a Private Limited Company (PLC). LLPs are believed to be easier to form and to operate on a day-to-day basis. Additionally, it imposes a lesser compliance burden when there is little activity. As a result, many entrepreneurs view starting their business in this manner is advantageous. In this essay, we will discuss the numerous benefits and drawbacks of forming an LLP in India.

 

Advantages of Annual Compliance for LLP

The following are some of the benefits of forming an LLP in India:

 

There is no minimum contribution required.

In an LLP, there is no minimum capital requirement. An LLP can be founded with as little cash as feasible. Additionally, a partner’s contribution may consist of tangible, moveable or immovable, or intangible property, as well as other benefits to the LLP.

 

There is no restriction on the number of business owners.

A limited liability partnership (LLP) must have a minimum of two partners and a maximum of unlimited partners. This is in contrast to a private limited company, which is limited to 200 members.

 

Reduced registration fees

The cost of  LLP registration is quite modest in comparison to the expense of forming a private limited or public limited company. However, the cost differential between creating an LLP and a Private Limited Company has narrowed in recent months.

 

There is no necessity for an annual audit.

All businesses, whether private or public, regardless of share capital, are required to have their financial statements audited. However, there is no similar requirement for LLPs. This is viewed as a substantial benefit of compliance. A Limited Liability Partnership is needed to conduct a tax audit only in the following circumstances:-

• The LLP’s contributions exceed Rs. 25 lakhs, or
• The LLP’s annual revenue exceeds Rs. 40 lakhs.

 

Aspects of LLP Taxation

LLPs are taxed similarly to partnership firms. Thus, the LLP is taxed on its profits, but the partners’ interests in the LLP are not taxed. As a result, no dividend distribution tax is due. The income tax provision referred to as a ‘deemed dividend does not apply to LLPs. Section 40(b): Interest to partners is deductible, as is any payment of salary, bonus, commission, or remuneration.

 

Not subject to Dividend Distribution Tax (DDT).

In the event of a corporation, if the owners withdraw income from the corporation, the corporation is subject to an additional tax duty in the form of DDT @ 15% (plus surcharge and education cess). However, no such tax is charged in the case of LLPs, and partners can readily remove income from an LLP. Mandatory Annual Compliance for Limited Liability Partnership (LLP) in Bengaluru – important compliances.

Documents required for LLP Annual Filing

LLP Form 11 The LLP Form 11 contains information about the number of partners, the total number of partners, the total contribution made by all partners, the details of any body corporate that is a partner, and a summary of partners. All LLPs must file this form within 60 days of the fiscal year’s end and pay the specified charge. As a result, the annual deadline for filing LLP Form 11 is the 30th of May.

 

What are the due dates for Annual Compliance for LLP in Bengaluru?

In India, LPs must file their Annual Return within 60 days of the end of the fiscal year and their Statement of Accounts and Solvency within 30 days of the end of the fiscal year’s first six months. Unlike corporations, LLPs are required to have a fiscal year of April 1 to March 31.

 

Form 8 of the LLP

Form 8 must be filed within 30 days of the end of the fiscal year’s first six months, together with a prescribed fee. This must be certified by a chartered accountant/company secretary/cost accountant and digitally signed by two selected partners. Form 8 includes a Statement of Solvency, a Statement of Accounts, and an Income and Expenditure Statement.

Audit of LLP Taxes

LLPs are legally distinct legal entities. As a result, the Designated Partners are responsible for maintaining accurate books of accounts and filing annual returns with the MCA each fiscal year. LLPs are exempt from auditing their accounts unless their yearly revenue surpasses Rs.40 lakhs or their donation exceeds Rs.25 lakhs.

Filing Income Tax Returns

LLPs are required to file an income tax return on Form ITR 5. Form ITR 5 can be filed electronically through the income tax website using the designated partner’s digital signature. In India, the deadline for filing LLP tax returns is July 31st if no tax audit is necessary. LLPs with sales of more than Rs. 40 lakh or a contribution of more than Rs. 25 lakh are required to have their accounts audited by a chartered accountant. The deadline for reporting taxes for LLPs that are subject to audit is September 30th.

Annual Return of an LLP

The Annual Return, or Form 11, is a summary of the Partners in an LLP and an indication of management changes.

 

Each LLP is required to file an Annual Return in Form 11 with the Registrar within 60 days of the end of the financial year, i.e. on or before 30th May.

 

Statement of Accounts and Solvency (Annual Accounts/ Statement of Accounts/ Financial Statements/ Profit and Loss Statement & Balance Sheet)

 

1. a) The LLP must maintain accurate accounting records. Accounts may be maintained on a cash or accrual basis.
2. b) Each fiscal year ending on March 31st, a Statement of Solvency (Accounts) must be completed.
3. c) Each year, LLP Form – 8 must be filed with the Registrar of Companies on or before October 30th.
4. d) It should be noted that LLPs/FLLPs with an annual turnover over Rs. 40 lakh or with a partner contribution obligation over Rs. 25 lakh are required to have their accounts audited by the LLP/auditor FLLP’s on a mandatory basis.

 

Date of Submission

1. Annual Return (Form 11) within 60 days of the fiscal year’s closure (For F.Y. 2018-19 due date is 30-05-2019)
2. Annual Statement of Accounts and Solvency (Form 8) on or before October 30th (For F.Y. 2018-19 due date is 30-10-2019)

Income Tax Returns LLPs may file an income tax return in the ITR format. 5. If an LLP’s accounts are required to be audited under section 44AB, it is essential for the LLP to file its income tax return electronically using a digital signature.

 

Advantages of a Limited Liability Partnership over a Private Limited Company

 

Exemptions from the requirement to maintain Minutes books and Statutory Registers, as well as flexible tax rates, etc.

No, an LLP does not require an annual general meeting. AGM is a once-a-year meeting of the Company’s shareholders. Due to the lack of a shareholder structure in an LLP, no annual general meeting is required.

Generally, a board meeting is associated with a meeting of the Board of Directors. An LLP does not have directors; rather, designated Partners administer the firm and are held accountable for compliance. Thus, in the case of an LLP, a meeting of the Board of Partners is recommended.

The maximum number of partners is unlimited.

 

Some Critical Points About Limited Liability Partnerships

Is it possible to convert an existing partnership firm to an LLP?

Yes, by complying with the provisions of clause 58 and Schedule II of the LLP Act, an existing partnership firm may be changed into an LLP.

 

ROC – Filings: Form 17 must be filed in conjunction with Form 2 in order to convert and incorporate an LLP.

 

Is it possible to convert an existing corporation to an LLP?

Yes, by complying with the provisions of clause 58 and Schedule III and IV of the LLP Act, any existing private business or current unlisted public company may be changed into an LLP.

 

ROC-Filings: A Form 18 combined with a Form 2 must be filed with the registrar for such conversion.

 

Is it possible to convert an existing corporation to an LLP?

No, only private/unlisted public companies are eligible to convert to LLP status.

 

LLP’s fiscal year

Each LLP must follow a consistent fiscal year (April to March) that ends on the 31st March of each year.

 

Is it necessary to file the details of the charge with the registrar’s office?

While it is not required to file charge details with the Registrar’s office, stakeholders may do so freely.

 

ROC – Filing: Charge information, such as the creation, modification, or satisfaction of a charge, maybe filed as an Appendix to e-Form 8. (Interim).

Consequence for non-compliance

Non-compliance exposes you to financial losses, security breaches, licence revocations, company interruptions, substandard patient care, trust erosion, and a tarnished reputation. Noncompliance exposes you to financial losses, security breaches, licence revocations, company interruptions, substandard patient care, trust erosion, and a tarnished reputation. Mandatory Annual Compliance for Limited Liability Partnership (LLP) in Bengaluru – important compliances.

Why SattvaCFO?

SattvaCFO has had a great record of instrumentalizing how LLP compliances can be provided in the simplest way possible. Our team will help you access the loopholes and help you decide and process what is essential to speed up the process.