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Why Annual Compliance for Your LLP is essential and beneficial?

·         Limited Liability Partnership (LLP) submits forms that are accessible to companies and the authorized party may visit or audit the financial worth of the company

·         LLP annual filing provides a record of the company's financial worth and capacity while this information is available to interested individuals or parties

·         Formal compliance is essential for any business, and Limited Liability Partnerships must file their annual reports. This filing status can be viewed on the MCA portal by anyone. Annual compliance is necessary to determine the credibility of a business and is taken into account when seeking loans or meeting similar requirements.

·         LLP firms must file annual compliance reports, which are necessary for converting the firm into another type of organization. These reports also aid in the closure process of an LLP firm. Even if the firm was not operating, the Registrar may still require the filing of the annual compliance reports and fees.

·         To avoid penalties and maintain active status, Limited Liability Partnerships must file their annual return. Failure to do so can result in the LLP being declared defunct or obtaining default status, as well as partners being disqualified from future appointments. Filing annual returns not only keeps the LLP active, but also saves it from hefty penalties and extra fees.

Important details to include in your Annual Compliance filing checklist

-          An LLP possesses the ability to initiate legal action and be subject to legal action. It also has the authority to hire employees and conduct business activities directly.

-          The LLP can engage in various legal agreements and each partner is not held responsible for the misconduct or negligence of another partner.

-          Additionally, an LLP can open a bank account and provides limited liability protection for its partners. If there is only one member in the company, they have the opportunity to find a new partner without dissolving the LLP. If the number of partners decreases to less than two, the sole partner can still find a replacement.

-          LLPs can hold separate assets and accounts from their promoters or supporters. They can have an unlimited number of partners and are considered a separate legal entity. Finally, an LLP has the power to raise funds from banks, partners, and NBFCs.

List of items to be completed when submitting the annual compliance report for a Limited Liability Partnership (LLP):

-          The Registrar of Companies (ROC) requires submission of annual returns. LLPs must complete and submit their annual returns using the prescribed Form 11 format.

-          The deadline for filing annual returns is 60 days or 2 months after the end of the year, which falls on May 30th each year.

-          All registered LLPs must comply with annual reporting requirements, even if there is no business activity. This requirement applies even if the LLP has been closed or does not have a business bank account. 

ANNUAL SUBMISSION OF LLP

-          LLPs are required to submit their financial year records from April 1st to March 31st annually, unlike other types of companies.

-          Therefore, the deadline for filing the LLP annual return is May 30th, and the deadline for submitting the Account & Solvency report is October 30th each financial year. In addition to the MCA annual return filing, LLPs must also file their IT returns every year.

Tax audit for a Limited Liability Partnership (LLP)

LLPs are separate legal entities and it is the duty of the designated partners to maintain proper account reports and file annual returns to the MCA every financial year. Auditing is not necessary unless the LLP's annual turnover exceeds Rs.40 lakhs or the contribution is more than Rs.25 lakhs.

 LLP Form 8

LLP Form 8 must be submitted along with a specified fee within 30 days or a month after the end of 6 months of the year. The form should be digitally signed by two designated partners of the company and certified by an authorized chartered accountant, company secretary, or cost accountant. It includes a Statement of Solvency, Statement of Income & Expenditure, and Statement of Accounts.

LLP Form 11

LLP Form 11 is a document that contains details about the partners, including the number of partners, the total contribution received from all partners, and information about any corporate partners. It also provides a complete summary of the partners. All LLPs are required to submit this form within 60 days of the end of the financial year, along with the appropriate fee. Therefore, the deadline for filing LLP Form 11 is May 30th each year.

INCOME TAX RETURN SUBMISSION

-          LLPs are required to submit their income tax returns using Form ITR 5. This form can be submitted electronically through the official website of the income tax department, using the digital signature certificate of the designated partner of the LLP.

-          If the LLP does not require a tax audit, they can file their tax returns by July 31st. However, if the LLP's contribution exceeds Rs. 25 Lakh or their turnover exceeds Rs. 40 Lakh, they must have their accounts statements audited by an authorized Chartered Accountant. The deadline for filing tax returns for LLPs that require an audit is September 30th.