LLP refers to a Limited Liability Partnership which is a business entity registered under the Ministry of Corporate Affairs (MCA). LLPs are a flexible legal and tax entity that enables partners to benefit from scaled economies by working together while also decreasing their liability for the works of other partners. And like every other business, there are certain legal obligations that LLPs have to undertake. Here’s a LLP Statutory Compliance list to help you understand more about the legalities.
There are three mandatory compliance requirements to be served by LLPs.
All LLPs have to file Annual Returns and Statement of Accounts for every Financial Year. It is mandatory for an LLP to file a return irrespective of whether it has done any business.
Filing of Annual Return
LLPs have to file two types of MCA yearly returns each financial year. The two forms are Form 8 and Form 11.
Form 8
Form 8 is an Annual Filing Form, which is to be filed with the Registrar of Companies every year. This form covers a declaration on the state of solvency of the LLP by the designated partners and also notice related to the statement of assets and liabilities, income and expenditure of LLP. There are two parts in Form 8.
Part A – Statement of Solvency and Part B – Statement of Accounts, Income and Expenditure
Form 11
Form 11 consists of the Annual Returns. It has details of each partner along with everyone’s contribution to the organization. Form 11 is required to be filed within the first 60 days after the end of the financial year, i.e., on or before May 30 every year.
Income Tax Filing
LLPs with an annual turnover of less than ₹40 lakhs in the previous financial year or LLPs where the partner’s debt of contribution is less than ₹25 lakhs must file their income tax return on or before July 31 of the assessment year.
LLPs with a turnover of higher than ₹40 lakhs and or partner’s capital contribution of more than ₹25 lakhs would need to get a tax audit. LLPs who need tax audits must file their income tax return before September 30 for the applicable assessment year.
Filing of Statement of Accounts
All the LLPs should maintain individual account books on an accrual or cash basis. The report requires to be submitted on or before March 31 every year. In case of LLPs with a turnover of higher than ₹40 lakhs or capital over ₹25 lakhs, the accounts have to be audited by a Chartered Accountant.
The above three constitute the LLP Statutory Compliance list and are mandatory for any LLP firm. LLPs that do not obey the establishment of the Companies Act, 2013, can be punishable with a fine of minimum ₹25,000 and to a maximum of ₹5,00,000. Further, the designated partner could punish with a penalty of ₹10,000 and ₹1 lakh for non-compliance.
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