Annual Compliance of LLP

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Overview of Annual Compliance for Private Company

Updated on Feb 11, 2024 10:39:28 AM

Limited Liability Partnership (LLP) is an individual/separate legal entity registered under the Ministry of Corporate Affairs (MCA) in India. LLP registration requires a maximum of two persons as partners, with at least one being an Indian citizen and resident. Partners in an LLP are responsible for maintaining proper books of accounts, filing Income Tax Returns, and submitting annual returns to the MCA every financial year.

Establishing an LLP requires periodic filing to maintain compliance and avoid substantial penalties for non-compliance. While LLPs have fewer compliance requirements compared to private limited companies, the penalties for non-compliance can be significant. For example, while non-compliance may result in a penalty of INR 1 lakh for a private limited company, it can be up to INR 5 lakh for an LLP.

Overview:

LLPs have a separate legal existence, and partners are responsible for maintaining proper books of accounts and filing annual returns with the MCA annually.
LLPs are not required to audit their books of accounts unless their turnover exceeds INR 40 lakhs or if their investment/contributions exceed INR 25 lakh, simplifying the annual filing process.
LLPs must file their Statement of Account & Solvency within 30 days from the end of six months of the financial year and Annual Return within 60 days from the end of the fiscal year.
LLPs are required to maintain a financial year from April 1st to March 31st, with the Statement of Account & Solvency due by October 30th and the annual return due by May 30th each year, regardless of business activity. Some annual filings are mandatory even if the LLP has not conducted any business.

Protection of Limited Liability Partnership

Key Benefits of LLPs:

Legal Standing: LLPs have the power to sue and be sued, giving them legal recognition and protection.
Banking Facilities: LLPs can easily open bank accounts, facilitating financial transactions and operations.
Employment Opportunities: LLPs have the authority to hire employees, enabling them to expand their workforce as needed.
Contractual Agreements: LLPs can enter into various legal contracts, allowing them to conduct business activities and partnerships.
Limited Liability: Each partner in an LLP is shielded from the actions or negligence of other partners, providing limited liability protection.
Direct Management: Partners in an LLP have the right to manage the business directly, ensuring efficient decision-making and operations.
Financial Security: LLPs offer limited liability protection to owners, safeguarding their personal assets from business liabilities.
Partner Flexibility: LLPs can easily replace partners if the number decreases below two, ensuring continuity in business operations.
Scalability: LLPs can have an unlimited number of partners, allowing for future growth and expansion opportunities.
Continuity: Even if an LLP has only one partner, there is no immediate dissolution requirement, providing time to find new partners.
Separate Legal Entity: LLPs enjoy a separate legal existence distinct from their partners, ensuring legal autonomy and accountability.
Asset Protection: LLP assets and accounts are separate from those of the partners, protecting personal assets from business risks.
Fundraising Options: LLPs can raise funds from partners, banks, and non-banking financial companies (NBFCs), facilitating capital acquisition for business growth.

Checklist details for Filing of Annual Compliance

Annual returns require to be filed with the Registrar of Companies (ROC).
Annual returns to be accompanied and filled up as per the prescribed format of LLP Form 11
This is needed to be filed within 60 days from the close of the financial year. This could be done on the 30th of May of each year.
The LLP annual compliance ought to be met by every registered LLP, even if there is no marketing activity. It has to be also obtained if the LLP has been closed down and whether or not a business bank account exists.

Documents Needed for Annual Filing of Compliance for LLP

Required Documents for LLP Registration:

PAN Card & COI: PAN Card and Certificate of Incorporation of the LLP.
LLP Agreement: The LLP Agreement along with any supplementary agreements, if applicable.
Financial Statements: Financial Statements of the LLP duly signed by the Designated Partners.
Digital Signature: Digital Signature Certificate (DSC) of all Designated Partners is required.
LLP Identification Number: Verification of LLP Identification Number (LLPIN).
Name of the LLP: Proof of Title for the chosen name of the LLP.
Registered Office Address: Documentation related to the location of the registered office of the LLP.
Business Classification: Record of Business/Service/Occupation/Others for the LLP.
Principal Business Activities: Details of the principal business activities of the LLP.
Details of Designated Partners and Partners: Information regarding the Designated Partners and Partners of the LLP.
Contribution of Partners: Total responsibility for the contribution of partners of the LLP.
Capital Contributions: Total capital contributions supported by all partners of the LLP.
Compliance History: Review of Designated Partners and Partners for compliance history.
Penalties and Offenses: Details of penalties imposed on the LLP, if any, and information on any intensifying offenses.
Affiliation with Other Entities: Features of LLP and/or companies in which Partners hold the position of Director/Partner.

Complete Registration Procedure: Annual LLP Compliance

End to end assistance for LLP compliances.
We have expertise in developing the customized LLP annual compliance program for an LLP along with a constant reminder method and Keeps a solid track of your Legal LLP compliance.
We update on developments on adjustments according to the LLP Registration act 2008, which is of absolute significance.
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Timeline

LLP Annual Filing: We require filing a necessary annual return for LLP with MCA and maintaining yearly compliance.
Annual Return Preparation: Need to make Annual return based on the financials and production during the previous financial year.
Annual Return Verification: Needed to prepare Annual Return based on specifications submitted and send for confirmation and approval.
Finalization: After endorsement, file Annual Return with the Ministry of Corporate Affairs adjacent to the necessary appendages.