The Process of LLP Annual Compliance

[Ishita Ramani]

Introduction

A Limited Liability Partnership (LLP) has fewer compliance obligations compared to a Private Limited Company. However, it is important to file returns regularly to ensure compliance and avoid penalties. This blog will provide information on LLP Annual Filing, LLP Annual Compliance, the process for LLP E-filing, and other relevant information on Limited Liability Partnership.

What is Limited Liability Partnership (LLP)?

A Limited Liability Partnership (LLP) is a legal entity that is recognized by the Ministry of Corporate Affairs (MCA). It provides the advantages of the limited liability of a company and the flexibility of a partnership. It can continue to exist regardless of changes in partners and is capable of entering into contracts and holding property in its own name.

Points to remember while Filing Annual Compliance

• Annual compliance is mandatory for all registered LLPs, even if there is no business activity.
• The Registrar of Companies requires annual returns to be filed, which must be accompanied by LLP Form 11 and Form 8. LLP Form 11 must be submitted within 60 days of the end of the fiscal year, which is on or before 30th May every year. Form 8 must be filed along with Form 11, and the due date for filing Form 8 is 30th October.
• The relevant documents regarding the annual compliance must be maintained, even if the LLP has been closed down or a bank account in the name of the business does not exist. The Statement of Account and Solvency of an LLP must be signed by the designated partners of the LLP.
• It is important to comply with the Registrar of Companies (ROC) & Income Tax authorities, as delay or failure to meet compliance requirements will result in heavy penalties.

LLP Annual Compliance Forms

• The Form 8 is a statement of account which is filed with ROC.
• The Form 11 is an annual return which is filed with ROC.
• Any information related to the tax return is fill out in Form ITR 5, which is filed with the Income Tax Department.
• If any tax audit is applicable to the LLP, then it is to be filed with the IT Department.

The Process of LLP Annual E-Filing

Here are the steps to complete the eFrom from the MCA Portal:

1. Visit the MCA Portal and navigate to the LLP page.
2. Choose a category from the options provided to get the eForm.
3. Download the eForm along with the instruction kit, if applicable.
4. Familiarize yourself with the process by studying the instruction kit.
5. Complete the downloaded eForm, ensuring that all mandatory fields are filled.
6. Attach all the required documentation as attachments to the eForm.
7. Connect to the internet and use the Prefill button in the eForm to populate the blanked-out part, if applicable.
8. Use a digital signature to sign the document. It can be done by the applicant or a representative of the applicant.
9. Click the check form button in the eForm to verify the mandatory fields, mandatory attachments, and digital signature.
10. Upload the eForm for pre-scrutiny. This service is available under the Services tab or by clicking the upload eForm button under the eForms tab.
11. The system will verify (pre-scrutinize) the documents. If any flaws are found, you will be promoted to correct them before the document is ready for execution.
12. Based on the due date of filing, the system will determine the charge, including late payment fees if required.
13. Make the payment using the appropriate process, such as electronic methods (credit card, NEFT, Pay Later, internet banking) or traditional methods (at the bank counter through challan).

Annual filing for LLP refers to the mandatory requirement for Limited Liability Partnerships (LLPs) to submit annual returns, financial statements, income tax returns, and compliance certifications. This filing ensures transparency, accountability, and regulatory compliance, allowing LLPs to maintain accurate records and fulfill their legal obligations.

Summary

The Limited Liability Partnership Act states that an LLP is not required to audit its books of account until its contribution or annual turnover exceeds Rs. 25 Lakhs or Rs. 40 Lakhs. The LLP accounts must contain a declaration from the partners saying that they understand their responsibilities for complying to the accounting & financial statement preparation standards in order to be exempt from audits.