Annual Compliances for Limited Liability Partnership

Limited Liability Partnership

Limited Liability Partnership in India is a new concept. LLP in India came into existence in the year 2008 with the Limited Liability Partnership Act. Since then it has become a preferred form of business. It is a modern form of partnership having elements of both a company and a partnership. LLP is registered with the Registrar of Companies (ROC). An application to register LLP has to be made online at the MCA e-filing portal. Therefore, there is a defined set of annual LLP compliances that are to be followed in the prescribed format.

Annual LLP compliances

LLP is a type of business entity. This type of entity shares features of both a partnership firm and a company. It is regulated by the Registrar of Companies, Ministry of Corporate Affairs. LLP is a legal entity, which is separate from its partners. It also has perpetual succession.

Related: Closing of an LLP (Limited Liability Partnership)

Mentioned below are the LLP compliances which are important to the firm:

• Books of Account

The first and most important LLP compliances are that all LLPs must maintain proper books of account relating to its affairs on a yearly or accrual basis. However, The book of accounts must be kept as per the double-entry system of accounting at the registered office. In the case of LLPs with a turnover of more than Rs.40 lakhs or capital of over 25 lakhs, the company accounts must be audited by a Chartered Accountant.

• Annual Return filing

A Limited Liability partnership has to file 2 types of annual returns each year as prescribed by the MCA.

These are:

1. Form 8 should be filed within 30 days from the end of 6 months of the financial year along with an asked prescribed fee. Thus, This must be digitally signed by 2 designated partners and certified by a professionally practicing chartered accountant/company secretary/cost accountant. Form 8 has the following two parts:
   • Part A – Statement of Solvency
   • Part B – Statement of Accounts, Statement of Income & Expenditure

   (The penalty for not filing this form would be Rs. 100 per day until it is filled and submitted.)

2. Form 11 contains details of the number of partners, total number of partners, total contribution received by all partners, details of body corporate as partners, and a summary of partners. Thus, All LLPs should file this form within 60 days from the closure of the financial year with the prescribed fee. An LLP cannot be wind-up/closed operations until all the recommended annual returns are filed.

• Income Tax Return Filing

All the registered LLPs in India have to file the Income-tax return each respective year. It is one of the most vital LLP compliance. Hence, even an LLP that is dormant and does not have any transaction should also file an income tax returns in each financial year.

• Maintenance of Legal Documents

All the LLPs are required to maintain their below-listed incorporation documents:

1. Names of partners and changes made
2. Proof of fee payment
3. Statement of account
4. Solvency & Annual return filed by LLP with the Registrar at its registered office.

The above records should be readily made available for inspection at the request of concerned authorities.

Compliances of LLP in India