The (LLP) limited liability partnership is upgraded version of General Partnership. The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 7 January 2009 and has been notified with effect from 31 March 2009.
As the name suggests a limited liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. LLP registration has been made easy and LLP compliance is very less as compared to the private limited company.
LLP is having a corporate character and a separate legal identity from its members. It has the right to deal in property in its own name, the power to sue and be sued, execute contracts, open account and is governed by the Companies Act 2013. Annual compliances for LLP is very important to avoid penal consequences. The Legal Entity-Continue its existence irrespective of Changes in partners i.e. perpetual succession in LLP.
The words “Limited Liability Partnership” or use the word “LLP” as the last words in its name. Through voluntary consent or necessary interference of the concerned Tribunal, Winding up is processed.
The designated partners are held liable for the purpose of all the LLP compliances and such related matters, acts, pursuant to the applicable provision of the LLP Act 2008.
However the founder's liability after LLP registration is protected as the personal liability of a partner which may arise due to the errors or omissions, or any other liability may arise in business is separate from LLP.
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With a cutthroat race of getting LLP established, many companies are completely missing on annual compliances for the LLP, hence one must keep in mind that initial precautions work well for future growth of the LLP. Best methods would be to give your headache to a professional who is expert in LLP annual compliances expert or you can contact us.
Lets us get started the annual compliances for LLP:
1. Obtain the TAN for the LLP if applicable.
2. After the receipt of the incorporation Certificate, one must execute the partnership agreement within 30days and must also be signed and executed between the parties.
Two rubber seals – round type with LLP name and LLP name with designation should be prepared after incorporation of an LLP. The LLP seal would be required for the purpose of opening of the bank account of the company, for applying for PAN, such other registrations for the company and is yet another important step towards LLP compliance.
LLP stationery like letterhead, invoice, official documents, etc., can be prepared with the LLP name and registered office of the LLP.
Maintaining a proper book of accounts on cash or accrual basis is a must condition, it can be maintained manually with the register kept at the registered office or electronically through accounting software popular in the market.
Bank account for an LLP is considered to be a corporate entity. The following documents must be submitted for the opening of LLP bank account:
NOTE: All the documents are required to be signed by a Designated Partner and must have the seal of the LLP.
The Auditor appointment is required to be for the purpose of audit of the book of accounts of an LLP after the turnover exceeds Rs.40 lakhs or capital contribution exceeds Rs.25 lakhs. An auditor anyway helps in keeping up with the LLP compliances.
An LLP is required to maintain the books of account pertaining to the financial year on a cash or accrual basis in a double entry accounting system as the crucial part of LLP compliance.
The books of account must be maintained at the registered office of the company as can be asked for inspection as LLP compliance check by authorities. Accounts are also required to be audited by a charter accountant in cases when the LLP’s turnover is more than Rs.40 lakhs or capital of over 25 lakhs.
Form 8 within 30 days from the end of 6 months of the financial year along with prescribed fees are required to be filled by the LLP with MCA for the purpose of filling Annual return filling.
Statement of Accounts & solvency contains a declaration on the state of solvency of the LLP by the designated partners and also information related to statement of assets and liabilities and statement of income and expenditure of the LLP. Every LLP is required to file ‘Statement of Accounts & Solvency’ in prescribed LLP Form 8. Form 8 is required to be filed by the LLP on an annual basis as a part of LLP annual compliance.
Important key points regarding the filling of annual return in Form 11-LLP annual compliance:
Let us discuss this in detail turnover requirements for Income tax filling-Crucial part of annual compliance of LLP in India.
The audit is not required until your turnover is not more than 40 Lacs and Contribution to capital is less than 25 Lacs. However, beyond this, it is mandatory to get the LLP audited and helps in getting LLP compliance done timely.
It depends on the amount of capital contributed by the partners:
Penalty on LLP: Per day Rs 100 till the form is filled. Say for 5 days delay Rs 500/- is to be paid on each form, Form 8 individually and Form 11 separately.
Penalty on Designated Partner: The penalty may extend from Rs. 10,000 to Rs. 100,000, and even the ROC can issue Notice to LLP and initiate legal proceedings against such LLP.
In case one fails to file the LLP Agreement within 30 days of the formation of the LLP, heavy penalty is levied i.e. Rs.100 per day of default with no ceiling on the maximum fine. So better take care of the legal provision and ensure that the LLP agreement is properly executed and filed within the due date. LLP agreement is quite an important part of LLP compliance.
Most of the LLPs fails to comply with the LLP compliances, filing due dates and end up paying heavy penalties. However one can evade this by hiring legal consultant for the same, in case you wish to hire a consultant for strong follow-up and reminders, we are highly equipped with the system to ensure that your filings are done on time.
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It is not mandatory to appoint a company secretary in LLP for LLP compliances, as such no such provisions' of the LLP act 2008 talks about it.
The registrar has absolute power with respect to demanding of any information, which he may deem fit is necessary to carry out his duty pursuant to the provisions of the LLP Act 2008 and related to annual compliance of LLP. The registrar is having the power to summon the designated partner or such related another concerned person. One must also maintain certain documents pertaining to the incorporation. One must maintain all the incorporation related documents so that it can be readily made available for the purpose of inspection of records by the inspections authorities. The registrar can summon you for every noncompliance of LLP.
A limited liability partnership to enter/ update the details of all partners can do so through a screen for 'Enter/ Update partners' detail for filing LLP agreement'. It is available to the designated partners (as a business partner) after login to the MCA portal.
Well absolutely not. You are not required to file a form 15 at both the ROC of LLP. The file at the one ROC and the registrar shall process the form and forward the same to the new Registrar for registration.
Keep in mind eForm 15 shall not be allowed in case there is any other eForm(s) pending. Upon approval, Certificate for change of registered address from the Registrar office shall be provided.
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