Annual Compliance To Be Done By Limited Liability Partnership (LLP) Through Out The Year
LLP or Limited Liability Partnership is nothing but an alternative corporate form that provides benefits of ‘Limited Liability’ to the designated partners at reasonable costs of compliance.
It is a legal entity. However, the liability of all Designated Partners is limited to the portion as contributed by the Designated Partners. Hence, LLP have benefits of both ie., Company as well as of partnership. LLP is an entity which is governed by the laws and regulations prescribed by the Limited Liability Partnership Act, 2008.
A LLP is a hybrid between a company and a partnership firm. The LLP is a separate legal entity, where no partner is liable for the unauthorized action of the other partners, and whose liability is restricted to his own stake in the liability. Every partner would be agent of the LLP, but the LLP would not be bound by anything done by partner.
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A. Features of LLP
i. Body Corporate
According to Section 3 of the Limited Liability Partnership Act (LLP Act), 2008, as amended, LLP is a body corporate formed under the LLP Act having features of separate legal entity from its partners.
ii. Perpetual Succession
Perpetual Succession is one of the benefits of forming a LLP, a member may come and do but LLP will carry on forever.
iii. Separate Legal Entity
LLP is a separate legal entity which means that the LLP is solely responsible for the acts beings done. The liability of the Partner is being restricted only to the proportion being invested by the partners.
iv. Mutual Agency
It means the action of one partner cannot make the other liable for his unauthorized actions. Partners are agents of LLP.
v. LLP Agreement
LLP agreement is the most crucial document which contains the rights and duties of all the partners. Each and everything is governed by the LLP agreement.
vi. Limited Liability
Acc. to Section 26 of the LLP Act, every Partner is an agent of the LLP. Liability of the partners is limited to the proportion as contributed by them in a LLP
vii. Artificial Legal Person
LLP is an artificial legal person in the eyes of the law. It can enter into any contracts in its own name. It has all rights as are provided to partners under the LLP agreement. It can file a suit and a suit can be filed against the LLP in its own name.
viii. Minimum and Maximum Number of Partners in an LLP
Every LLP must have at least a minimum no. of 2 partners and at least two individuals to be appointed as designated partners. Further, at least 1 designated partner shall be resident in India. No maximum limited has been decided which means that LLP can have any no. of partners.
B. Mandatory Compliances For An LLP
All the LLP registered with the MCA needs to file Annual Returns and Statement of Account for every financial year. The related details must be filed with respective RoC, irrespective of whether it has done any business or not through the financial year.
1. Filing LLP Annual Return
It is mandatory for all Limited Liability Partnership to file an Annual Return with the Registrar within a period of 60 days of closure of the financial year in Form-11 and accompanied by such fee as may be prescribed under the LLP Act. That is, the Annual Return has to be filed on or before 30th May every year.
2. Filing of Statement of Account & Solvency
Every Limited Liability Partnership needs to prepare a Statement of Solvency (Accounts) every year ending on 31st March. For this purpose LLP FORM-8 is filed with the Registrar of Companies on or before 30th October every year.
3. Books of Account to be maintained by LLP
- LLP to maintain prescribed books of account.
- Book keeping can be on cash or accrual basis
- It should be prepared on double entry system of accounting.
- Books of Accounts to be preserved for 8 years.
4. Income Tax Return filing by LLP
Income Tax Return of LLP shall be filed by the LLPs every year on or before the due dates as mentioned below and the form under which the income tax return is to be filed is ITR form 5.
ITR form 5 can be used by the AOP, LLPs BOI and firms as referred to in section 2(31)(vii) of the Income Tax Act. It is to be noted that the return of income shall be filed electronically through digital signature if the account of the LLP are required to be audited under Section 44AB.
| S.NO | Income Tax Particulars | Due Date |
| 1.
|
In case Audit is not Required
(Those LLP whose annual turnover does not exceed Rs 40 Lakhs or partner’s obligation contribution exceeds Rs 25 Lakhs required to file their return. It is optional for them to get their accounts audited or not. |
31st July of every year |
| 2. | In case Audit is Required
(Those LLP whose annual turnover exceeds RS 40 lakhs or partner’s obligation contribution exceeds RS 25 Lakhs are required to file their Income Tax. They are required to get their accounts audited by Auditor) |
30th September every year
|
| 3. | In case LLP is involved in International Transaction
(LLP that entered into an international transaction with associated enterprises or undertook certain Specified Domestic Transactions are required to file FORM 3CEB) |
30th November every year |
C. Audit Under LLP
Limited Liability Partnership if its turnover exceeds, in a financial year Rs 40 Lakhs or its contribution is more than Rs 25 Lakhs is required to get its account audited. However it may voluntarily get its accounts audited.
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About Author: Praveen Singh is a Founder and Managing Partner of TRIJURIS (Legal & Taxation Service Provider in Delhi). The head office of the firm is based in Delhi. The firm inter-alia engaged in providing services related to Corporate and Commercial laws advisory, Indirect taxation, Setting up industries in India as well as outside India, Legal recovery services and other regulatory matters. The firm has actively participated in assisting MSMEs in India and small businesses to scale there business and closing working with them in respect of recovery of their legitimate dues.
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