A limited liability partnership or LLP is a legal entity that incorporates the goodness of a Partnership firm and a corporation. In this type of partnership, the partners have limited liabilities which mean that the partners are not required to pay off the debts of the company using their personal assets and at the same time, the individual partners are not responsible for another partner’s misconduct or negligence.
A LLP is required to be registered under the Limited Liability Partnership Act, 2008.
Introduction to Limited Liability Partnership
A limited Liability Partnership means a business where minimum two partners are required and there is no limit on the maximum number of partners. The liability of the partners are limited up to the extent of Capital contribution done by each partner in LLP.
It is a separate legal entity distinct from its owners. It can enter into a contract and acquire property in its name. Everyone is liable for their own acts. It is a combination of partnership and company. It has the feature of both these forms.
LLP Annual Compliance
As soon as an LLP is incorporated, there are certain mandatory compliance which an LLP is required tofulfil. Let’s have a look at the list of important compliance that an LLP needs to follow after the registration in India.
One time mandatory compliance calendar for LLP
1. LLP Form 3 – The Partners of an LLP are required to execute an LLP Agreement and a copy has to be filed with the Registrar or Companies in LLP Form 3 with in 30 days of incorporation of LLP.
2. Opening Bank Account- It is necessary to open a Current Account in the name of the LLP with any Bank in India. All the transactions in the name of the LLP should be transacted through the LLP Bank Account only.
3. PAN & TAN number – Every LLP has to obtain a Permanent Account Number (PAN) & Tax Deduction and Collection Account Number (TAN) from Income tax department.
4. GST registration- Every business with annual turnover exceeds Rs. 40 lakhs (Service providers 20 lakhs)is required to GST Registration under Goods and Services Tax (GST) Act and Rules. It is not mandatory to obtain GST immediately after incorporation of the LLP. The LLP can obtain this registration as and when required.
Annual mandatory compliance for LLP
A. Filing of the Statement of Account & Solvency:
Fill up in the prescribed format as per LLP Form 8. Form 8 contains a declaration on the solvency state of the LLP by its designated partners as well as gives details of the statement of assets and liabilities and statement of income and expenditure of the LLP. This is required to be filed within 30 days from the end of six months of the close of the financial year that is by 30th October of each financial year.
B. Annual return Filing:
Annual Returns are to be filed in the prescribed Form-11. The return needs to be filed with the Registrar of Companies. This is required to be filed within 60 days from the close of the financial year, in other words by 30th May of each year.
C. Filing of Income Tax:
The deadline to file the tax return for an LLP which is required to get its books verified and reviewed is 30 September.
Limited liability partnerships (LLPs) that need to file Form 3CEB (LLPs that have entered into international transactions) can do their tax filings by 30 November.
LLPs should file their income tax returns in Form ITR 5. The form could be submitted online using the digital signature of the designated partners.
LLP whose accounts are not required to be audited and file their returns latest by 31st July each year.
It may be noted that only those LLP whose annual turnover exceed Rs. 40 lakhs or whose contribution exceeds Rs 25 lakhs are required to get their accounts audited.
Consequences of Non Compliances
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 requirements may lead to hefty penalties.
The requirements mentioned above are compulsory to be followed irrespective of any number of transactions or amount of turnover. If LLP has not comply fewer compliances before due dates, they have to pay hefty penalties. If you need assistance or expert advice, please contact companysuggestion.com. We have a group of legal professionals and experts who may help you.