Limited Liability Partnership (LLP), regular filing of returns is essential to uphold LLP compliance standards and steer clear of substantial penalties for non-compliance. LLPs benefit from a relatively lighter annual compliance burden compared to private limited companies. Nevertheless, the potential fines for non-compliance can be significant. While a Private Limited company might face penalties of INR 1 lakh for non-compliance, LLPs could incur penalties of up to INR 5 lakh.
Compliances by LLP
Limited Liability Partnerships are separate legal entities; hence, it is the duty of the elected partners for maintaining a proper book of accounts and filing an annual return with the Ministry of Corporate Affairs (MCA) annually.
Limited Liability Partnerships are not required to audit their books of account except where their annual turnover is more than Rs.40 lakhs or if the contribution is more than Rs.25 lakh. Hence, an LLP is not required to get their books of account audited if it fulfils the above-mentioned condition, making the process of annual filing simpler.
Limited Liability Partnerships are required to file their Statement of Account & Solvency within a period of 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 financial year.
Dissimilar to Companies, Limited Liability Partnerships are mandatorily required to maintain the financial year, from 1st April to 31st March. Hence, the Statement of Account & Solvency is to be filled on or before October 30th of every financial 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.
What is Form 11?
Form 11 is an annual return to be filed by all LLPs irrespective of turnover during the year. Even if the LLP does not carry out any operations or business during the financial year, Form 11 is required to be filled. Apart from the basic information about the name, and address of the LLP, and details of partners/designated partners, other details that need to be provided are:
- Total Contribution of/to partners of LLP
- Details of notices received of imposed penalties/compounded offenses committed during the financial year.
What is Form 8?
Form 8 is a statement related to account and solvency. It is a declaration by the LLP to the ROC that the financial position of the LLP is sound and that it can pay its liabilities or debts and also contains the key details of the financial statement of the LLP. The deadline for filing Form 8 LLP is 30 October of each financial year.
Limited Liability Partnerships (LLPs) Compliance Requirements
Limited Liability Partnerships (LLPs) are recognized as separate legal entities, and therefore, they are bound by specific compliance obligations. The responsibility for ensuring compliance rests with the Designated Partners of the LLP. The key LLP compliance requirements for LLPs include the following:
Ensuring annual compliances of LLP with these obligations not only maintains the legal status of the LLP but also helps in building transparency, credibility, and financial accountability.
In LLP annual filing, one must diligently maintain accurate and up-to-date financial records. These records should encompass details of the LLP’s financial transactions, profits, expenses, assets, and liabilities. Proper bookkeeping is crucial to assess the financial health and performance of the LLP.
LLPs are required to file an annual return with the Ministry of Corporate Affairs for each financial year. This annual return is submitted using Form 11, and it provides essential information. This form gathers essential details about the LLP, including the total number of designated partners, comprehensive partner information, contributions received by partners, and a summary of all partners involved.
Filing Deadline
All LLPs are required to submit Form 11 within 60 days after the conclusion of the financial year. This means that Form 11 should be filed by May 30th each year.
Importance of Timely Filing
It’s crucial for LLPs to adhere to this deadline, as failure to do so can have consequences. One significant implication is that an LLP will not be permitted to close or wind up its operations until it has filed all its annual returns, including Form 11.
Penalty for Late Filing
In the event that an LLP neglects to submit its LLP annual filing forms within the stipulated timeframe, it will incur a penalty of Rs.100 for each day of delay performed.
Duration of Penalty
The penalty will be applicable from the due date of filing the return and will continue until the actual return is filed.
LLPs must submit a Statement of Accounts & Solvency annually, which details the financial position of the LLP, including its assets and liabilities. This statement is filed using Form 8.
Due Date
LLPs are required to file Form 8 within 30 days from the conclusion of six months after the financial year ends. This means that Form 8 should be filed within this timeframe to maintain LLP compliance.
Signing and Certification
Form 8 can be digitally signed by two designated partners of the LLP. Additionally, it must be certified by a company secretary, chartered accountant, or cost accountant.
Form Components: Form 8 consists of two main parts:
Penalty for Late Filing
It’s essential for LLPs to adhere to the filing timeline for Form 8. Failure to file this form on time can result in penalties, specifically a daily fine of Rs.100.
Ensuring LLP annual Compliance with the filing requirements outlined in Form 8 is vital to maintain good standing and avoid financial penalties.
Statements of Accounts and Solvency
All enrolled LLPs are required to have their books of accounts in place and fill in data with respect to the profit made, and other financial data in regards to business, and submit it in Form 8, every year. Form 8 must be attested by the signatures of the designated partners and should also be certified by a practising chartered accountant or a practising company secretary or a practising cost accountant. Failing to file, the statement of accounts & solvency report within the specified due date will lead to a fine of Rs.100 per day. The due date to file form 8 is October 30 of every financial year.
Filing Annual Return
Annual Returns are to be filed in the prescribed Form-11. This form is considered as the summary of management affairs of LLP, like numbers of partners along with their names. Moreover, the form 11 has to be filed by 30th May every year.
Filing and Audit requirement under Income Tax Act
Limited Liability Partnerships whose turnover is more than Rs.40 lakh or whose contribution has exceeded Rs.25 Lakh have to get the books of account audited by practising Chartered Accountants under the Limited Liability Partnership Act, 2008. The deadline to file the tax return for an LLP which is required to get his books audited is September 30th.
Note: The threshold limit of Rs.1 crore for a tax audit is increased to Rs.5 crore with effect from AY 2021-22 (FY 2020-21) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments under the Income Tax Act, 1961.
For LLPs where tax audit is not required deadline, the due date for tax filing is July 31st. For LLPs which have entered into any international transactions with associated enterprises or have undertaken specified Domestic Transactions, need to file Form 3CEB. This form should be certified by a practicing Chartered Accountant. Limited Liability Partnerships which are required to file this Form can do their tax filing by 30th November.
FAQs
What are LLP Annual Filings?
LLP Annual Filings refer to the mandatory submissions and reports that Limited Liability Partnerships must file annually with regulatory authorities to maintain compliance
What is the penalty for non-compliance by LLPs?
Non-compliance can result in penalties of up to INR 5 lakhs for LLPs, making it essential to meet annual filing obligations.