A Limited Liability Partnership (LLP) is formed when two or more participants create a unique partnership with limited obligations. It is registered following the MCA’s compliance and regulatory requirements. A Limited Liability Partnership (LLP) is a special organizational structure or business form that straddles the partnership and a corporation. Because LLPs have their legal standing, they offer businesses limited liability protection while still allowing for perpetual succession. As a result, they must also comply with some Annual Compliance requirements and file the necessary returns. Annual MCA / ROC Key Compliances / Filings of Limited Liability Partnership (LLP) in India compliance.
Annual Compliance of LLP
Returns for a Limited Liability Partnership (LLP) should be filed regularly to ensure compliance and avoid the harsh penalties imposed by the law for non-compliance. Compared to the compliance obligations put on private limited businesses, a Limited Liability Partnership has just a few compliances to follow each year. The fines, on the other hand, appear to be fairly high.
Key Compliances by LLP
Because Limited Liability Partnerships are distinct legal organizations, the elected partners are responsible for keeping adequate accounts and completing an annual return. Limited Liability Partnerships must file their Statement of Account and Solvency before thirty days from the end of the first six months of the fiscal year and their Annual Return within sixty days before the fiscal year ends. Limited Liability Partnerships, unlike corporations, are required to keep a financial year that runs from April 1 to March 31. As a result, the Statement of Account & Solvency must be completed by October 30 of each financial year.
Preparing Books of Account
All LLPs must have adequate account books that provide precise information about all financial activities to maintain the required paperwork. The double-entry system of accounting must be used in such books of account. If the LLP’s annual sales reach 40 lakhs or its equity exceeds 25 lakhs, they must have their records audited by a practicing Chartered Accountant. Fail to abide by this RoC compliance for LLP might result in fines of up to 50 Lakhs. If the named partner fails to comply, the named partner may be fined between 10,000 and Ten Lakhs.
Statements of Accounts and Solvency
Every year, all enrolled LLPs must have their books of accounts in order, put in data on profits and other financial data about their firm, and file Form 8 to the IRS. The signatures of the chosen partners must be attested to Form 8, which must also be confirmed by a professional chartered accountant, a practicing company secretary, or a practicing cost accountant. A charge of Rs.100 per day will be imposed if the statement of accounts and solvency report is not filed by the due date. Every fiscal year, the deadline to file Form 8 is October 30.
Filing Annual Return
The required Form-11 is used to file annualized reports. This form describes the LLP’s administrative affairs, including the number of partners and their names. Furthermore, form 11 must be filled by May 30 every year.
Filing and Audit requirement under Income Tax Act
Under the Limited Liability Partnership Act, 2008, Limited Liability Partnerships with a turnover of more than Rs.40 lakh or a Capital Contribution of more than Rs.25 lakh must have their books of account audited by practicing Chartered Accountants. The deadline for filing an LLP’s tax return, which is needed to have its books audited, is September 30. The deadline for tax filing for LLPs when a tax audit is not necessary is July 31.
Form 3CEB is required for LLPs engaged in foreign transactions with affiliated companies or completed specified domestic transactions. A practicing Chartered Accountant should certify this form. Limited Liability Partnerships that are obliged to complete this form must do so by November 30. LLPs should use Form ITR 5 to file their income tax returns. With the aid of the chosen partner’s digital signature, this form may be filed electronically via the income tax website. LLP Annual MCA / ROC Key Compliances / Filings of LLP – Limited Liability Partnership in India compliance.
Maintenance of Documents
All LLPs must file the following documents:
- Names of partners on the incorporation certificate
- In terms of partners, changes have been made.
- All fee payments must be documented.
- Accounting statement
- Liquidity Statement
- Annual returns are submitted.
If the records mentioned above are inspected by the appropriate authorities, they must be immediately available.
LLP Annual Filing Due Date
The annual filing due date of LLP are as follows:
- Form 8 – Statement of Accounts – October 30 – Registrar of Companies
- Form 11 – Annual Returns – 30th May – Registrar of Companies
- ITR 5 (No Audit) – Income Tax Return – 31st July – Income Tax Department
- Audit – Tax Audit, if applicable – September 30 – Income Tax Department
Benefits annual compliance for LLPs
Benefits of maintaining annual compliance of LLP are as follows:
- Aids in the development of your company’s credibility and trustworthiness
- Allows you to apply for loans and obtain credit from a variety of sources.
- Other investors might use it to evaluate and analyze your financial situation.
- Serves as a verifiable record of your company‘s financial well-being and value.
- Maintains your active status while keeping you on the right side of the law.
- Avoid fines, penalties, and legal action by following these guidelines.
- Annual filing guarantees that an LLP may be easily converted into other business forms and that it can be closed quickly.
FAQ’s on Annual Compliance of LLP
Is annual compliance mandatory for all LLPs in India?
Yes, all LLPs in India are required to comply with yearly compliance requirements. If a limited liability partnership fails to meet the standards mentioned above, the government may levy fines. As a result, all limited liability partnerships in India must comply with the law annually.
Are audit requirements related to an LLP mandatory?
An LLP must hire a licensed chartered accountant when it is created or constituted. Aside from that, all forms linked to the audit must be completed and filed promptly. LLP Annual MCA / ROC Key Compliances / Filings of LLP – Limited Liability Partnership in India compliance.
If I have entered my LLP close to year-end, do I still need to file the annual return?
If an LLP is formed after October 1 of the current year, say October 1, 2020, it can file returns in the following March, March 31, 2021, or the following March, March 31, 2022, which means the LLP can file its first financial benefit for a period of 18 months.
What are the problems associated with the non-filing of Form 8?
By October 30, Form 8 must be filled out. A fine of Rs.100 per day of delay may be imposed if you fail to file.
What more information needs to be provided along with Form 8?
A Statement of Account and Solvency is Form 8. It must show the financial transactions made during the fiscal year and the financial status at the end of the year. In addition, the LLP must state the following:
- If the turnover is higher than the current Rs 40 lakh.
- It must also indicate that it has previously submitted a statement showing the establishment of charges/modifications/satisfaction till the end of the current fiscal year.
- Declare that the partners/authorized representatives have exercised reasonable care and responsibility in preparing and maintaining the accounts.
What are the attachments to Form 8?
Form 8 must be accompanied by the following documents:
- An obligatory attachment under the Micro, Small, and Medium Enterprises (MSME) Development Act, 2006 is disclosure.
- If any contingent obligations exist, a statement of contingent liabilities must be provided.
- As an optional attachment, any extra pertinent information can be given.
Who needs to authorize Form 8?
If the entire turnover of the LLP is less than or equal to Rs 40 lakh or the partner’s contribution obligation is less than or equal to Rs 25 lakh, Form 8 must be signed electronically by a minimum of two Partners of LLP or Authorised Representatives of Foreign LLP.
Form 8 must be approved by the LLP/ FLLP’s auditor if the LLP’s total sales exceed Rs 40 lakh or the partners’ contribution obligation exceeds Rs 25 lakh.
What are the problems associated with the non-filing of Form 11?
If the LLP files Form 11 before May 31, a penalty of Rs 100 per day would be imposed. Because there is no ceiling on the penalty, the sum might arise over time.
What is the information that needs to be provided in Form 11?
Form 11 is a declaration that contains information about your partners as well as all of your donations. The LLP must also give information about other businesses or LLPs in which the partners hold comparable positions. Because the donation reported on Form 11 must match the statement on Form 8, it must be filled out carefully.
Who needs to authorize Form 11?
If the sales are less than Rs 5 crores and the total partnership contribution is less than Rs 50 lakh, the authorized partner’s digital signatures will suffice. Form 11 must be verified by a Company Secretary in full-time practice if the turnover exceeds Rs.5 crores and the total partner contribution exceeds Rs 50 lakh.
How can SattvaCFO help in the annual compliances of LLP in India?
SattvaCFO has years of experience in LLP compliance in India. We can assist you with the preparation of your financial statements. Our staff can also assist with the submission of MCA annual returns and income tax filings. Our staff will also assist you with documentation to guarantee that you always comply with the law. LLP Annual MCA / ROC Key Compliances / Filings of LLP – Limited Liability Partnership in India compliance.
