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  • Writer's pictureAccounString Management Private Limited

Annual Compliance For LLP

A Limited Liability Partnership is a unique organisational structure or business type that has characteristics mid-way between a partnership firm and a company. LLPs enjoy a separate legal status, and hence provide entrepreneurs limited liability protection, while also enabling perpetual succession. As a result, they also need to meet some Annual Compliance and file the required returns. In this blog, we will take a look at LLP compliances, LLP annual filings, and the ROC Compliance regulations for LLPs.

  1. What powers does an LLP enjoy

  2. Annual Compliance for LLP

  3. Documents required for LLP Annual Filing

  4. LLP Annual Filing Due Date

  5. Why maintain annual compliance for LLPs

What powers does an LLP enjoy?

  • Enjoys separate legal status

  • Has the power to buy, sell and hold movable, immovable, tangible, and tangible assets

  • Has the right to sue other companies

  • May open a bank account in the partnership’s name

  • May employ people to work for them

  • Has the right to enter into legal contracts.

While LLPs enjoy the rights mentioned above, they also need to maintain annual ROC compliance for LLPs. This requires LLP annual filing to be done on time in the right manner. Here’s a quick look at the various LLP compliances, and how to ensure you meet all of them.

Annual Compliance for LLP

1. Books of Account

All LLPs must ensure they maintain the right documentation by having proper account books that contain accurate information regarding all financial transactions. Such books of account must follow the double-entry system of accounting. In case the LLP’s annual turnover exceeds INR 40 lakhs or has a capital exceeding INR 25 lakhs, they must ensure a working Chartered Accountant audits their books of account. Failure to comply with this RoC compliance for LLP will lead to the levying of fines of up to INR 5,00,000. Continued failure to comply can result in the designated partner having to pay between INR 10,000 and INR 1,00,000.

2. LLP Annual Filing

Annual compliance measures for LLPs require them to file two annual returns every year, in the name of Form 8 and Form 11.

Form 8

LLPs must file these returns 30 days before the end of six months of the current financial year. At least two designated partners must sign Form 8 and get it certified from a working CA, Company Secretary, or cost accountant. They must submit their Statement of Accounts, and Solvency by October 30th every year. The penalty for not filing this return on time amounts to INR 100 for every day till it is filed. It consists of two parts which are as follows;

  • Part A – Solvency Statement

  • Part B – Statement of Accounts, Income, and Expenditure

Form 11

Form 11 for LLPs contains details regarding the number of partners, their contribution, details of corporate bodies that are partners, and an overall summary. LLPs must file Form 11 2 months before the end of the assessment fee, i.e. May 30th every year.

Along with Form 8 LLPs, also have to attach the disclosure under the MSME Development Act, 2006. Furthermore, in case any contingent liability exists, the LLP must attach a statement regarding such liabilities along with the annual filing.

Annual IT Return Filing

All LLPs must file their income tax returns on time, irrespective of their profits or losses. Even an LLP that has been inactive for a while must file the required ITR to avoid fines and other legal hassles. LLPs may file their annual IT returns via Form ITR 5.

Maintenance of Documents

All LLPs must maintain the following documents;

  1. Incorporation Certificate

  2. Names of partners

  3. Changes made with regards to partners

  4. Proof of all fee payments

  5. Statement of accounts

  6. Statement of Solvency

  7. Annual returns filed

The records mentioned above must be readily available in case of an inspection by the concerned authorities.

Documents required for LLP Annual Filing

  1. PAN Card of the LLP

  2. Certificate of Incorporation of the LLP

  3. LLP Agreement along with supplements, if any

  4. Financial statements of the LLP, self-attested by the designated partners

  5. DSC of all Designated Partners

LLP Annual Filing Due Date

1. Form 8- Statement of Accounts- 30th October

2. Form 11- Annual Returns- 30th May

3. ITR 5 (No Audit)- Income Tax Return- 31st July

4. Audit- Tax Audit, if applicable- 30th September

Why maintain annual compliance for LLPs

  1. Helps your firm build higher credibility and trustworthiness

  2. Enables you to request for loans and avail credit from other sources

  3. Helps other investors check and assess your financial position

  4. Serves as a credible record of your company’s financial health and worth

  5. Helps you maintain your active status and stay on the right side of the law

  6. Avoid fines, penalties, and legal action

  7. Annual filing ensures straightforward conversion of an LLP into other organisational types, and also quick closure

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