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Annual Filings for Limited Liability Partnership: A complete Guide

Annual Filings for Limited Liability Partnership A complete Guide

LLP or limited liability partnership combines a limited liability company and a partnership company that requires at least two partners. An LLP does not have many rules to abide by, unlike other business structures in India. However,  LLPs are required to submit certain mandatory declarations. Submitting these declarations is mandatory even if the LLP is not in business. The partners of an LLP are responsible for the proper maintenance of accounts and other records to be kept by the LLP.  These documents must be submitted regularly to maintain compliance and avoid strict legal penalties for non-compliance. This article focuses on Annual Filings for Limited Liability Partnership in detail. 

Annual Filings for Limited Liability Partnership 

Every registered LLP must follow some annual compliances, which are as follows:

  1. Maintenance of Accounts Book
  2. Filing of Income Tax Returns
  3. Form No 8- Filing of Statement of Accounts and Solvency
  4. Form No 11- Filing of Annual Return 

Maintenance of  Accounts Book

  • The book of account shall be ready before 31st March of every financial year.
  • If the annual turnover increases to Rs 4 lakhs, the book of account shall be audited by a Chartered Accountant.
  • Keeping a record of accounts is mandatory compliance. In case of failure to maintain a book of accounts, an LLP will be penalized with Rs 25,000 to Rs 5 lakhs.
  • In addition to that, the partners of such LLP may be penalized with an amount of Rs 10,000 to Rs 1 lakh for non-compliance

Filing of Income Tax Returns

  • Every year, an income tax return must be filed in the Form of ITR-5.
  • After auditing the accounts of LLP, it is mandatory to file income tax returns.
  • If the annual turnover exceeds Rs 60 lakhs, the LLP is required to get their accounts audited and file for income tax returns by 3oth September of every financial year. 
  • An LLP whose account need not be audited can file for income tax returns by 31st July of every financial year.
  • LLPs engaged in international transactions shall get their book of accounts audited by a chartered accountant and file for income tax returns by 30th November of every financial year. 

Form-11- Filing of Annual Return

  • All LLPs registered under the Limited Liability Partnership Act of 2008 are obliged to file Form-11 annually.
  • Via this form, an LLP  provides a summary of details of its partners and their contribution in terms of capital in the company.
  • Digital signatures of the designated partner will be sufficient if the turnover is less than Rs 5 crores and the total partner contribution is less than Rs 50 lakhs.
  • A Company Secretary must verify Form-11 if the annual turnover exceeds  Rs.5 crores and the overall partner investment exceeds Rs 50 lakh.
  • Every LLP must complete Form 11 regardless of whether or not the LLP had any commercial transactions during the year.
  • Every LLP must fill the form and submit it to the registrar within sixty days of closing every financial year.
  • Upon failure of filing of Form no 11 in the suggested time frame, a fine of Rs 100 shall be imposed per day for such delay.

Form-8- Filing of Statement of Accounts and Solvency

Form-8 is a statement of accounts and solvency. The LLP declares to the ROC that its financial condition is capable of fulfilling its liabilities or debts. The essential details of the LLP’s financial statement are filed with the ROC via Form-8.

  • Requirement for an audit: LLPs with an annual turnover of less than 40 lakh rupees or if the partner’s contribution exceeds Rs 25 lakhs in a financial year, then such an LLP is not required to have their accounts audited.
  • Deadline for  submitting the Form: The deadline for submitting the form- 8 is 30th October of  each financial year,

Advantages of Annual Filings for Limited Liability Partnership

Following are the benefits of filing annual returns for an LLP:

  • Penalties can be avoided: In case of non-compliance, heavy penalties are levied on the company. Regular non-compliance on the part of LLP may lead to the status of the defaulter and will be disqualified from other appointments. So annual filings can save an LLP from any penalty or disqualification. 
  • Increase in Market Credibility of LLP: Proper filing of annual returns and other compliances will increase the credibility of such a company in the market. It increases the reputation of an LLP in the eyes of potential consumers and investors.
  • Attracts more Foreign Direct Investment: Investments through FDI[1] increases if the LLP complies with rules and regulations as prescribed by the law. Investors are more likely to invest in these LLPs, and through FDI, an LLP can increase their capital, which is beneficial for their growth and rapid development. 

ConclusionAnnual Filings for Limited Liability Partnership

LLP is one of the business models that impede strict compliance and has a nominal tax obligation. Aspiring entrepreneurs prefer such a business model since Limited Liability Partnership is a facilitating business model with too little compliance and works more seamlessly than other business models. However, there are certain annual filings for limited liability partnership that shall be abided by. Non- compliance with mandatory rules may lead to heavy penalties and disqualification, which can be an obstacle in developing such LLP.

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