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Limited Liability Partnership Compliances

Swarit Advisors

| Updated: Nov 27, 2017 | Category: Business Registrations

Limited Liability Partnership Compliances is a form of business entity under which there is the limited liability of the members. The liability of each partner is limited to the extent of their contribution. In case of illegal or unauthorized action taken by any partner, it provides protection to its members.

Limited Liability Partnership is a hybrid of a company and a partnership firm which consist the positive features of company and partnership firm. It is considered as the separate legal entity having less restrictions and compliances.

Here are the following steps that need to be taken for incorporating LLP.

REGISTRATION PROCESS

  • Obtain DIN (Designated Identification Number)

Every individual intends to be appointed as designated partner of a Limited Liability Partnership has to make an application to obtain Director Identification number.

  • Register Digital Signature of Designated partner

Every partner that need to sign the electronic form has to acquire Digital Signature Certificate from the Certifying authority.

  • Name Availability

An applicant is required to file Form-1 for the name reservation of LLP with defining the significance of the keyword in the proposed name of the company.

  • Incorporation Form

For the purpose of incorporating Limited Liability Partnership Form, 2 is required to be filed with the registrar with the prescribed fees. In subscriber’s sheet, attachment details are required to be given in respect of Name of partners/ Nominees/ Witnesses. Proof of registered office is required to be attached. To become the partner in LLP, an individual is required to give consent in the prescribed format.

  • LLP Agreement

LLP agreement is drafted according to the provisions of LLP Act and it is mandatory to file at the time of registration and it can also be filed within 30 days. Designated partners shall be responsible for complying with the provisions of LLP Act. This agreement shall contain information on various matters such as Name, object, registered office, net profits or losses and details of designated partners etc. For the LLP agreement, Form 3 is required to be filed.

Registration will be completed after all the formalities done and it gets approved.

Annual Compliances

After incorporation of a Limited Liability Partnership (LLP), there are certain compliances that need to be completed to ensure the smooth functioning of the LLP.

Since LLP is a separate legal entity, a proper care must be taken to ensure LLP compliances are being completed on time to avoid penalty provisions. The overall compliance requirement for an LLP is less cumbersome in comparison to the company incorporated under Companies act 2013.

Here are the following Limited Liability Partnership compliances that need to be complied with:

  • LLP Agreement

After incorporation of an LLP, an agreement is required to be filed with the Ministry of Corporate Affairs within 30 days. The LLP Agreement governs the rights and duties of partners. It is mandatory for all LLPs and even in the absence of a specific LLP Agreement, an LLP Agreement must be executed, specifically excluding applicability of any or all paragraphs of Schedule I (default LLP agreement).

In case of failure of filing LLP Agreement within 30 days of incorporation, it will attract penalty of Rs.100 per day of default with no ceiling on the maximum fine. Therefore proper care must be taken to ensure that the LLP agreement is properly executed and filed within the due date.

  • LLP Seal

LLP seal would be required for the opening bank account of the company and for applying for PAN.  Therefore it is required to purchase two rubber seals – round type with LLP name on incorporation of an LLP

  • Letterhead

LLP stationary like letterhead, invoice and other official documents can be prepared with the LLP name and registered office of the LLP.

  • PAN Application

After incorporation of a Limited Liability Partnership Procedure, PAN application (Form 49A) is required to be filed online. After submission of an application, PAN acknowledgment must be signed and sealed by a Designated Partner of the LLP and then signed application must be couriered to the NSDL office for issue of PAN card. PAN card of the LLP will be sent to the registered office address of the LLP in 10 to 20 working days.

  • Open a Bank Account

As it is considered to be a corporate entity, bank account for a Limited Liability Partnership can be easily opened.

Here are the following documents of the Limited Liability Partnership must be submitted for the opening of LLP bank account:

  1. Copy of the Limited Liability Partnership agreement.
  2. Copy of the Incorporation document and DPIN (Designated Partner Identification Number) of the designated partners.
  3. Copy of the LLP Registration Certificate issued by the ROC.
  4. Copy of LLP-IN issued by the ROC.
  5. Copy of the Resolution to open a bank account.
  6. List of authorized person/s with the specimen signatures to operate the account duly attested by Designated Partners.
  7. Copy of PAN allotment letter.

All these documents must be signed by a Designated Partner and must have the seal of the Limited Liability Partnership.

  • Auditor Appointment

There is no requirement for the audit of the book of accounts of a Limited Liability Partnership unless turnover exceeds Rs.40 lakhs or capital contribution exceeds Rs.25 lakhs. Therefore there is no concept of appointment of auditor in an LLP.

  • Annual Return

Each LLP is required to file the Annual Return with the Registrar of Limited Liability Partnership in Form 11 within 60 days of closure of its financial year. Its financial year close by 31st March, therefore, Annual Return is required to be filed on or before 30th May every year.

  • Annual Accounts

LLP has to maintain books of accounts according to double entry system and prepare a Statement of Accounts and Solvency for every year ending 31st March. Limited Liability Partnership has to file such Accounts to the Registrar of LLP in Form 8 within 30 days from the end of 6 months of such financial year. Hence the accounts are required to be filed on or before 30th October every year.

In case annual turnover exceeds Rs.40 lakhs or whose contribution exceeds Rs.25 lakhs, shall be required to get its accounts audited by a qualified Chartered Accountant.

  • Income Tax

Under Income Tax Act, LLP has to close its financial year as on 31st March every year and they have to file the returns with Income Tax Department.

In case its annual turnover is more than Rs.60 Lakhs, then the accounts are required to be audited.

LLP whose accounts are not required to be audited 31st July of every year
LLP whose accounts are subject to Audit 30th September of every year or such other date as may be notified by the Income Tax authorities.

 

Limited Liability Partnership Registration in India has to file the annual return within 60 days from the end of close of financial year. Statement of Account & Solvency by 30th October of the end of following fiscal year. The audit of Books & Accounts is applicable in case it crosses the annual turnover limit of Rs.40 Lac in a year.

Annual return consists following:

  1. Audited Balance Sheet of the Company.
  2. Audited Profit & Loss Account.
  3. Confirmation of the situation of Registered Office Address.
  4. Current and details of a change in the contribution of partners.
  5. Detail about the changes in partners.
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