ANNUAL COMPLIANCES OF LIMITED LIABILITY PARTNERSHIP
What is LLP?
Limited liability partnership is a form of entity which entails features of a partnership firm and a company. The LLP is managed by its partners and it is a separate legal entity from its partners. The concept of Limited Liability Partnership has been brought by way of enforcing Limited Liability Act, 2008. All LLPs are required to maintain its books of accounts on cash basis or accrual basis. The books of accounts shall also be preserved in the registered office of the LLP for the specified period.
Benefits of LLP:
- LLP can raise funds from its partners, Banks and NBFCs
- The process of incorporation of LLP is simple and easy
- LLP can easily Transfer its ownership
- LLP is separate legal entity form its partners
MANDATORY COMPLIANCES OF LLP:
- Form -11 consist of annual return. It contains the details of all the partners, their contributions towards the LLP, etc.
- Form-11 should be filed within 60 days of the end of financial year. i.e. on or before 30thMay every year.
- It must be Digitally signed by one of the Designated Partners of the LLP. In case total obligation of contribution of partners of the LLP exceeds Rs. 50 lakhs or turnover of LLP exceeds Rs. 5 crores, then LLP Form 11 needs to be certified by a Company Secretary in whole time practice.
- Basic details like Total obligation of contribution, total contribution received by partners of the LLP, Summary of Designated Partners and Partners etc.
- Further, details of LLP and/ or company in which partner/ designated partner is a director/ partner is attached to the form.
II. INCOME TAX RETURN:
Every LLP has to file Income Tax Returns every year. The last date of filing of return for LLP is 31st July every year. However, any LLP under tax audit is required to file its Income tax return by 30th September.
Each designated partner for an LLP is required to file form DIR 3 KYC on for before 30th September of each Financial year.
- Form-8 consists of the statement of Account and Solvency. It consists of information related to the statement of assets of the LLP and liabilities and statement of income and expenditure of the LLP.
- Form 8 should be filed within 30 days from the end of 6 months of the end financial year. i.e. by 30th October of each financial year.
- Designated partners must sign the form digitally. Further, it must be certified by a chartered accountant, auditor or the accountant of the LLP.
There are two parts in Form 8. They are:
- Part A – Statement of Solvency
- Part B – Statement of Accounts, Statement of Income & Expenditure
What are the Consequences of Non-Compliance?
If there is a delay in filing Form 8 and 11 of LLP, you will have to pay the penalty of Rs. 100 per day of default. One cannot close or wind up their LLP without filing Annual Accounts. Also, Non-compliance of any of the mandatory requirement may lead to hefty penalties.