Annual Compliance – LLP
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How To File Annual Return For LLPs?
A Limited Liability Partnership business is required to file an Annual Return within 2 months of the closing of the financial year.The return needs to be filed with Form 8 and Form 11 with the Registrar of Companies (RoC).
What is Annual Compliances for LLP?
A Limited Liability Partnership enjoys a separate status. Thus, an organization needs to maintain its active status by regularly filing with the Ministry of Corporate Affairs (MCA). Annual compliance filing is mandatory for any LLP, whether having a business or not. Annual compliance for LLP requires filing two separate forms. One of which is for Annual Return, whereas another one is for Statement of Accounts and Solvency.
The forms are filed for reporting the activities and financial data for each financial year in the upcoming year. The failure to fulfill LLP Annual Compliance requirements levies an additional fee of ₹ 100 each day of a delay till the actual date of filing. Hence, apart from the mandate, the heavy penalty compels the Designated Partners to fulfill the requirements.
Procedure for LLP Tax Filing
LLPs must file an income tax return using Form ITR 5. Form ITR 5 can be filed online through the income tax website using the digital signature of the designated partner. After filing an LLP tax return, the taxpayer should print two copies of Form ITR-V.
One copy of ITR-V, signed by the assessee should be sent by ordinary post to Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka). The other copy can be retained by the assessee for his record.
Benefits of Annual Compliance Higher Credibility Legal compliance is a primary requirement for any business. The status of LLP annual filing is displayed at the Master Data of the LLP on MCA portal and the same can be accessed by any person. For loan approvals or any other similar requirements, compliance is a major criterion to measure the credibility of the organization. Record of Financial Worth The forms filed by the LLP are accessible by companies. Hence, while entering into contracts or major projects, the concerning party may also inspect the financial worth. LLP annual filing provides the record of its financial worth and capacity to an interested person or party. Maintain Active Status and avoid penalties In case of consecutive default in annual filing, the LLP can be declared as defunct or receive default status. Also, the partners can be declared as defaulters and may also be disqualified from their further appointment in LLP or company. Hence, LLP needs to file the return to maintain active status. Regular filing also saves the LLP from heavy additional fee and penalties. Easy conversion and closure For conversion of the LLP into any other organization, annual filing is very essential. The regular compliance records ease the conversion task. The same applies in case of closure of LLP. Even if the LLP was non-operational, the Registrar may ask to fulfill annual compliance, with additional LLP filing fee, if applicable.
Documents required for LLP Annual Filing
PAN Card & COI
PAN Card and Certificate of Incorporation of LLP LLP Agreement The LLP Agreement along with any supplementary agreement, if any.
Financial Statement of LLP duly signed by the Designated Partners.
DSC of all Designated Partners is required
Annual Compliance - LLP FAQs
An LLP is supposed to file the LLP annual return in Form 11, the financial statement of the accounts and solvency, and the income tax return.
The LLP Form 8 or the statement of account and the solvency is to be filed every year by all the LLPs that are registered in India. It is filed with the MCA irrespective of the turnover.
The Partners need to comply with the annual return filing with the MCA, filing the statement of accounts.
There are many privileges for the LLPs as compared to other companies there are exemptions from maintaining the minutes' books, statutory register, annual general meeting as well as flexible rates.
The Board meeting is conducted by the Board of Directors, here no BOD is involved in the LLPs instead the designated partners run the whole business and are also responsible for the compliance
The LLPs are corporate entities and are operated by the legal rules and the procedures that are the stated in LLP Act 2008. Irrespective of the turnover the LLPs have to file the annual returns giving details on the management on the financial performance. Any delay in the same. attracts a heavy penalty.