Limited Liability Partnership is a individual/seperate legal entity recorded under the Ministry of Corporate Affairs (MCAs) in India. For registration into an LLP, there should be at most limited two persons as partners where mandatorily one has to be an Indian citizen and a resident. The partners in an LLP should take responsibility for maintaining a proper book of accounts, filing an Income Tax Return, and submitting an annual return with the Ministry of Corporate Affairs (MCA) on every financial year.
To establish a Limited Liability Partnership (LLP), the returns should be filed periodically for maintaining compliance and escape substantial penalties under the law for non-compliance. A Limited Liability Partnership has only few compliance to be succeeded every year which is certainly lower as compared to the compliance needs to be placed on the private limited companies. However, the fines seem to be quite large. While non-compliance might only impose a Private Limited company INR 1 lakh in terms of penalties, it might impose an LLP up to INR 5 lakh.
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Limited Liability Partnerships gets a separate legal institution; therefore, it is the duties of the elected partners for simultaneously maintain a proper book of accounts and filing an annual return in consonance with the Ministry of Corporate Affairs (MCA) yearly. Limited Liability Partnerships are not needed to audit their 'books of account except' where their yearly turnover is more than INR 40 lakhs or if the investment or contributions to the company is more than INR 25 lakh. Therefore, an LLP is not required to get their books of account audited if it fulfils the condition as mentioned above, making the process of annual filing simpler.
Limited Liability Partnerships are required to file their Statement of Account & Solvency within thirty (30) days from the end of six (6) months of the financial year and Annual Return within sixty (60) days from the end of the fiscal year. Dissimilar to Companies, Limited Liability Partnerships are mandatorily required to maintain the financial year, from April 1st to March 31st. Hence, the Statement of Account & Solvency is to be filed on or before October 30th of every fiscal year, and the annual return for LLPs is due on May 30th every year, even if the LLP has not completed any business in that specific financial year. Some of the annual filings are mandatory whether the LLP has begun any business or not.
A Limited Liability Partnership (LLP) offers several distinct advantages that make it an attractive business structure, especially for small to medium-sized enterprises. Here are the key benefits of forming an LLP:
A Limited Liability Partnership (LLP) enjoys several privileges over a Private Limited Company (Pvt Ltd) due to its more flexible structure. Here are some key benefits of an LLP when compared to a Private Limited Company:
The Annual Filing process for an LLP involves submitting necessary documents and maintaining compliance with the Ministry of Corporate Affairs (MCA). Here’s a simplified overview of the steps involved:
The Statement of Accounts and Solvency are very important in limited liability partnerships (LLPs), providing a concise but accurate overview of an LLP’s financial status. It shows assets, liabilities, and equity, which is a key tool for stakeholders to measure the LLP’s financial health around. This document not only meets regulatory requirements but also increases transparency, and enables partners, creditors, and regulatory bodies to assess the solvency and financial stability of the LLP. It helps to build trust and creditworthiness in the operations of the LLP, hence reinforcing its position within the business community.
Form 11 is a Yearly return that is to be filled by all LLPs irrespective of turnover throughout the year. Even when an LLP does not convey out any services or business during the business year, Form 11 needs to be filed. Apart from Essential data about Name, Address of LLP, details of Partners/ Designated Partners, other information that need to be submitted are:
Overcharge:
A surcharge shall extend the measure of income-tax at the rate of 12% of such tax, wherever total income exceeds Rs. 1 crore rupees. Mostly, the surcharge shall be subjected to marginal relief. It is where revenue exceeds Ra. 1 crore rupees, the total cost payable as income-tax. The tax does not pass the total amount payable as income-tax on total revenue of Rs. 1 crore rupees by higher than the amount of income that exceeds Rs. 1 crore rupees.
Health And Education Blueprint:
The amount of income-tax and the mentioned surcharge, should be further increased by health and education cess measured at the rate of 4% of those income-tax and surcharge.
Alternative Merest Tax:
Tax due by LLP cannot be less than 18.5% (raised by Surcharge and HEC) of "adjusted total income" as per 'section 115JC'.
LLP Form 11 Due Date For Annual Return Filing
30/5/2020
The Due Date For IT Returns: 31.07.2020 / 30.09.2020
The last date for filing income tax returns for LLPs, which does not require Tax Audit July 31, 2020, and if Tax Audit is then needed due to date for IT Returns for LLP would be September 30, 2020.
LLP form 8 Due date- 30.10.2020
Late Fees For Form LLP 8 And LLP 11 Filing
If there is a noticeable delay in filing Form 8 and 11 of LLP, a penalty of Rs. 100 per day per form is payable from the due date of filing return till the actual date return is filed.
At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.
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Annual compliance for LLPs is not just a legal obligation but a strategic imperative. It acts as the foundation stone in continuing to win the trust of both the investors and the clients and the regulatory authorities. Through meeting annual compliance requirements for LLPs, businesses demonstrate their commitment to transparency and integrity. Besides this, the robust compliance frameworks for such entities protect their credibility and reputation, which are very important in this competitive world and among investors. Therefore, setting annual compliance at the forefront is not just to ensure statutory obligations but to invest in the long-term sustainability and success of the LLP. To know more about the Annual Compliance for LLP in detail consult with Professional Utilities.
There are 3 compliances that are necessarily needed for every LLP to comply for any financial year.
Yes, every LLP has to mandatorily file Annual Returns and financial statements with the Ministry even if they are not doing any business.
Only those LLP whose annual turnover exceeds Rs. Forty lakhs or whose capital contribution exceeds Rs. 25 lakhs.
Due dates of LLP compliance are based on the closure of each financial year. Financial Year of every LLP must be closed on 31st March.
a) LLPs registered between 1st April and 30th September: The LLP must close its financial year on 31st March of next calendar year.
b) LLPs registered between 1st October and 31st March: The LLP has an option to choose the end of its financial year.
You are required to re-submit your E-Form to rectify the incompleteness pointed out by the concerned MCA office.
If LLP has been incorporated on or after the first October of the financial year, then the first fiscal year of LLP can be of 18 months.
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