For a limited liability partnership (LLP), returns must be filed periodically to maintain compliance and avoid any penalties that could occur due to noncompliance. Having said that, while compared to a private limited company, an LLP has only some compliances, they need to follow every year, but bear in mind that the fines can be quite heavy if not complied with.
An LLP is a partnership between a limited number of partners where each partner owes a limited liability for any debts that occur in the partnership. They are separate legal entities bound by certain legal obligations and the partners of the LLP must bear the responsibility of adhering to the rules to maintain compliance.
An LLP Annual Compliance is the maintenance of a proper book of accounts and statements and filing an annual return with the MCA (Ministry of Corporate Affairs), at the end of every business financial year. Some of the key compliance requirements for an LLP includes:
Sl no: | E-form | Due date |
1. | LLP form 3 (LLP agreement) | Within 30 days of incorporation of the company-
May 30th of every year |
2. | Annual Return (Form 11)– summary of the affairs of the management of the company (with the partner names) | Within 60 days (about 2 months) of closing the financial year |
3. | Statement of Account and Solvency (Form 8)– all details about profits and other financial details | On or before October 30th every year |
4. | Income tax return (ITR-5)- if audit is not required-
(If the LLP does not have an annual turnover that exceeds 40lakh or partner’s obligation of contribution exceeds 25lakh must file their income tax but need not involve an auditor to audit accounts |
31st July of every year |
5. | Income tax returns (ITR-5) if audit is required-
(If the LLP has an annual turnover exceeding 40 lakh or a partner’s contribution exceeding 25lakh they must file their income tax and must get their accounts audited by an auditor under the income tax Act |
30th of September every year |
6. | Partner KYC | On or before 30th of September |
There is a list of documents that you must provide for the filing of annual compliance of your LLP company. They are-
An LLP happens to be one of the most popular and preferred structures for business due to its flexibility, less complex rules adherence and tax benefits. In comparison to a private limited company, an LLP provides the same advantages along with far fewer compliances to be adhered to.
Some of the advantages of LLP Annual compliance are-
If you want to convert your LLP into another corporate entity at any point in time, it is necessary for your annual filing to be in place. The filed records show the company’s health, further simplifying the conversion process. Generally, a Registrar investigates the fulfilment of annual compliance before the conversion and settlement of the company.
Maintaining compliance is the only way to protect yourself from liabilities and other disputes. An LLP compliance offers legal protection to the partners present in the company and eliminates any risks that can complicate the process.
Legal uncertainty is the first thing you must eliminate if you own a business. As an LLP, compliance is an indispensable part for your organization. Failing to keep up with the rules and regulations or on-time filings of important documents can lead to non-compliance, heavy penalties, and deteriorate the financial health of the company.
LLP Annual compliance makes sure that your company’s records are up to date and maintained. A compliant company fosters business profitability as they always have a clear picture of their assets, liabilities, and financial growth. Additionally, compliance helps and accelerates the process of ownership transfer if necessary.
When other companies contract with your company, they may introspect the financial health of your organization. Filing annual compliance and having a record of statements forms a picture of worthiness in the minds of potential interested parties when they are looking to enter into a contract with you.
Maintaining a business is a struggle, right from setting up to implementation. However, the filing and documentation for an LLP is easier than compared to other types of corporations as they have fewer compliances to worry about.
Every company must ensure that their organization maintains 100% compliance by adhering to all the rules and regulations, meeting the necessary requirements as dictated by the government. Bear in mind that this is an unsaid obligation. Failing to meet the requirements can result in heavy fines and penalties that can hurt the reputation as well as the financial health of your company. Some of the costs you need to be aware in an event of failed compliance are-
Alp Consulting has been a leading company in the field for close to 3 decades. With our rich knowledge and expertise, we help simplify the LLP annual filing process by providing expert guidance and handling essential tasks.
Our team of experts will assist you in the gathering and preparing necessary documents, digital signatures, as well as ensure certification by qualified professionals. Our streamlined approach will not only ensure the avoidance of penalties and compliance maintenance but will also allow you the time to focus on your core business operations, while we handle all the hassles of maintaining the paperwork.