LLP Compliance
LIMITED LIABILITY PARTNERSHIP COMPLIANCE
Limited Liability Partnership (LLP), governed by the LLP Act, 2008 came into force on 31/03/2009. The main objective behind such type of partnership was to introduce a type of business form which is a perfect combination of the operational easiness and flexibility of a partnership firm along with the limited liability of its partners which was earlier a limitation of partnership firm formed under Indian Partnership Act, 1932. In an LLP the formation of a partner is quite unique in the sense that there are two designated partners who give their name and consent to become the partner of the concerned LLP, at the time of its formation. Also, none of the partners can be held responsible for any misconduct or negligence leading to the imposition of any penalty or causing loss to the LLP. Just like the directors in a company, the designated partners have the right as well as the duty to manage internal and external business affairs, specifically assigned, in accordance with the LLP Agreement.
FEATURES of LIMITED LIABILITY PARTNERSHIP
- SEPARATE LEGAL ENTITY – LLP, unlike a partnership firm, is a body corporate having a separate legal entity from its partners. Thus, the LLP can own assets in its own name and can also sue or be sued by any other person.
- COMBINATION OF FIRM AND COMPANY – LLP is having the features of both company and partnership firm, thus making it a more attractive choice of business form.
- DESIGNATED PARTNERS - Every LLP is required to have at least two designated partners, and at least one of them should be an Indian resident i.e. he should be in India for at least 182 days in a financial year.
- PARTNERS ARE THE AGENT OF LLP – One of the main features is that all the partners of the LLP, shall be agents of such LLP i.e. any act of partners will make the LLP accountable for the same but any partner’s act cannot bind another partner.
- LLP AGREEMENT IS VOLUNTARY – Partners of an LLP are not required to enter into an LLP agreement since the same is not mandatory and in the absence of one, the mutual rights and liability of partners shall be determined in accordance with Schedule I of the LLP act, 2008.
- LIMITED LIABILITY – The partners of the LLP are having limited liabilities, which means that in case the assets of the LLP become insufficient to pay any liability, then the partners are liable only to the extent of their contribution and thus cannot be asked to pay from their personal assets.
- NAME CLAUSE - Every limited liability partnership is required to use the word “limited liability partnership” at the end of their firm’s name and the same be printed outside all their business outlets as well as on their official communication documents.
- PERPETUAL SUCCESSION – LLP, just like a company is having perpetual succession, which means that the retirement, death, and leaving of the firm by any partner or group of partners, will not affect the existence of the LLP.
- AUDIT REQUIREMENT – Any LLP whose contribution exceeds Rs. 25 lakhs or annual turnover exceeds Rs. 40 lakhs are required to file an audited annual statement of accounts along with solvency reports to the concerned Registrar.
- MANDATORY REGISTRATION – LLP is required to take registration mandatorily under the LLP Act, 2008.
- NUMBER OF PARTNERS – Unlike a partnership firm, an LLP shall have a minimum of 2 partners who will be the designated partners. There is no ceiling on the maximum partners.
Benefits of LLP Formation
- LIMITED LIABILITY OF PARTNERS – The partners of the LLP are having limited liabilities, which means that in case the assets of the LLP become insufficient to pay any liability, then the partners are liable only to the extent of their contribution and they cannot be asked to pay from their personal assets.
- SEPARATE LEGAL ENTITY – LLP is having a separate legal entity. Thus, they can own assets in its own name and can also sue or be sued by any other person.
- COST INVOLVED – The cost of formation of LLP is quite lesser than other forms of business and also the compliance cost is also very less.
- NO MUTUAL AGENCY - The partners of the LLP cannot be held liable and responsible for the misconduct or negligence of another partner.
- EASE OF FORMATION – LLP is much simpler and less time-consuming in terms of formation.
- EASE OF COMPLIANCE AND RESTRICTIONS – There are very few restrictions and compliances required to be fulfilled by the LLP.
Limited Liability Partnership Annual Filing
Indian Limited Liability partnerships must submit their Annual Return within sixty days of the end of the financial year and their Statement of Account and Solvency within thirty days of the end of the 6th month period end of the financial year. Limited Liability Partnerships are required to keep their financial year from April 1 to March 31. As a result, the Limited Liability Partnership’s annual return is due on May 30th, and the Statement of Account & Solvency is due on October 30th of every financial year. In addition to the ROC annual return. Limited Liability Partnership must file an income tax return under the income tax act 1961 every yearly,
|
LLP Form 11
|
LLP Form 8
|
LLP Tax Audit
|
Income Tax Return Filing |
|
Form 11 has details of the No of partners, total No of partners, total contribution received by all partners, details of the Company as partners & a summary of partners. All Limited Liability partnerships should file this form within Sixty days from the closure of the financial year with the prescribed fee. Thus, the compliance due date for filing Limited Liability Partnership Form 11 is 30th of May each and every Financial year. |
Form 8 must be filed within sixty days from the end of six months of the financial year along with the required nominal fee as specified by ROC. This must be DSC signed by 2 minimum available designated partners & it is compulsory certified by a CA/CS/CWA. Roc Form 8 has contained Statement of Income & Expenditure, Statement of Accounts & Statement of Solvency. There is 2 parts in Form 8. They are: Part A – Statement of Solvency Part B – Statement of Accounts, Statement of Income & Expenditure if you have not filed this form. Then LLP has to face to pay the penalty of Rs.100/day |
Limited Liability Partnership is a separate entity from its partner. Thus it is the requirement of the Designated Partners to maintain a book of accounts properly & file an annual returns with the ROC in each FY. Limited Liability Partnership are not required to statutory audit of books of accounts until the Yearly turnover cross INR 40 lakhs or if the contribution cross INR 25 lakhs. |
Limited Liability Partnerships must file ITR Return in the prescribed form (ITR 5). Online Form ITR 5 can be filed Via using the Govt portal of income tax by using the DSC signature of the designated partner. The last date of for the Limited Liability Partnership’s tax filing in India is July 31st if audit under income tax (tax audit) is not needed. LLP’s that receipt cross INR 40 Lakh or contribution cross INR 25 Lakh are needed to get their books of accounts audited by a practicing CA. The deadline for tax filing for Limited Liability Partnerships required to obtain an audit is Sept 30th. |
the compulsory compliance need to be mentioned must be complied with irrespective of the amount of turnover or the No of transactions, Limited Liability Partnerships, which are growing in the commercial business world, have to bear the burden of many compliances in order to avoid penalties. However, Is it, solely for the purpose of avoiding penalties? Answered is No, Since Limited Liability Partnerships has to comply way many compliances as compared to private limited company it is always better to file all the required forms & returns before the due date to avoid heavy penalties with timely annual LLP compliance filing.
Other Limited Liability Partnership Filling
LLP has a lesser no of compliances to compliance in comparison to private limited companies. Limited Liability Partnerships are only expected to file reports related to the statement of accounts and annual returns once a year, but failure to do so can be very expensive because fines for Limited Liability Partnership noncompliance are very high. Penalties may go up to INR 5 lakhs in many cases.
Make sure your origination in compliance with all periodic, annual, & transaction-based filings with the ROC. Non - compliance is now an expensive affair. Be cautious when it comes to Limited Liability Partnership filings. India Expert provides you with an effective & efficient timely Solution for your Limited Liability Partnership.
|
Form-3: Details in relation to LLP agreement & alteration, if any, made therein
|
Form-4: Notice of appointment, cessation, Alternation in name/address/designation of a designated partner or partner & consent to become a partner/designated partner |
|
Form-4A: Notice of cessation, appointment, alteration in particulars of a partners |
Form-5: filling of Notice for alteration of the name of LLP
|
|
Form-8: Submission of Statement of Account & Solvency |
Form-11: Filling of Annual Return of LLP |
|
Form-12: Form for required for details & updating of other address for service of documents |
Form-14: Application Form for intimating to Registrar of Firms about conversion of the partnership firm into LLP |
|
Form-15; Notice for alteration of the place of registered office |
Form-17: Application & statement for conversion of a partnership firm into LLP |
|
Form-18: Application & Statement for conversion of an unlisted public company / Private limited Company into LLP |
Form-22: Notice of intimation of Order Tribunal/ Court / CLB / Central Govt to the ROC. |
|
Form-23: This form is required for direction to LLP to change its name to the Registrar of Firms
|
Form-28: Return of alteration in the incorporation document or other instrument constituting or defining the constitution; or the registered or principal office; or the partner or designated partner of LLP incorporated or registered outside India |
|
Form-24: Application to the Registrar for striking off the name |
|
|
Form-25: Application for reservation/renewal of name by a Foreign LLP (FLLP) or Foreign Company |
Form-29: Notice of
|
|
Form-27: Form for registration of particulars by Foreign LLP (FLLP) |
|
|
Form-31: Application for compounding of an offense under the Act |
|
|
Form-32: Form for filing addendum for rectification of defects or incompleteness
|
POINTS OF DIFFERENCE BETWEEN LLP AND SOME COMMON TYPE OF BUSINESS
|
BASIS |
LIMITED LIABILITY PARTNERSHIP |
COMPANY |
PARTNERSHIP FIRM |
|
REGISTRATION |
Compulsory registration required under LLP Act, 2008. |
Compulsory registration required with the ROC in order to obtain the Certificate of Incorporation which is required to start the business. |
No compulsory registration required leading to certain disadvantages to the firm. |
|
NAME |
The name of the LLP to contains the words “Limited Liability Partnership” after its name. |
The name of a public company shall end with the word “limited” and that of private company with the words “private limited”. |
No such requirement prescribed. |
|
LIABILITY OF PARTNERS |
Limited liability, which is extended only to the amount of their respective contribution. |
Limited to the extent of the unpaid amount of their capital. |
Unlimited liability can be extended to the personal assets of the partners in case of deficiency of assets. |
|
LEGAL ENTITY STATUS |
Separate legal entity distinct from its members. |
Separate legal entity distinct from its members. |
No separate legal existence. |
|
AUDIT |
Audit by a professional CA or CS in case the contribution exceeds Rs. 25 Lakhs or the turnover exceeds Rs. 40 Lakhs. |
Compulsory audit required, irrespective of share capital and turnover. |
Required if the annual turnover exceeds Rs. 1 Crore for business or Rs. 25 Lakhs for the profession during a financial year. |
|
OWNERSHIP OF ASSETS |
The LLP having a separate legal entity is independent of the partners and thereby has ownership of assets. |
The company has ownership of the assets. |
The firm is dependent on its partners. Thus, they have joint ownership of assets. |
|
FOREIGN NATIONALS AS SHAREHOLDER / PARTNER |
Foreign nationals can be a designated partners as well. |
Foreign nationals can be shareholders subject to the provisions under FDI. |
Foreign nationals cannot form part of the partnership firm. |
|
TAXABILITY |
As applicable at par to a partnership firm. |
Taxed at 25% and 30% as per the type of company, excluding surcharge and cess. |
Taxed at 30% excluding surcharge and cess. |
|
MEETINGS |
Not specified under the act. |
Quarterly and annual meeting of board members and shareholders is mandatory. |
Not specified under the act. |
|
WHISTLEBLOWING MECHANISM |
The protection provided to a whistleblower who provides useful information during the investigation process. |
The protection provided to the whistleblower who provides useful information during the investigation process. |
No such provision |
|
NO. OF MEMBERS |
Minimum of 2. No ceiling on maximum. |
Private Co. - Minimum of 2, maximum 100. Public company – Minimum 7, no ceiling on maximum. |
Minimum 2, maximum 200. |
|
CREDIBILITY |
Their credibility is comparatively higher than that of a partnership but lesser than a company. |
High credibility due to stringent compliances and disclosures required along with timely rating by credit rating companies. |
Creditworthiness depends on the goodwill and creditworthiness of the partners along with their past performance. |
|
DISSOLUTION |
The procedural compliance is comparatively less. LLP can be dissolved either voluntarily or by order of the National Company Law Tribunal. |
Very lengthy procedure and can be dissolved by shareholders or by order of the National Company Law Tribunal |
Can be dissolved by the agreement of the partners, or by Court Order. |
|
CAPITAL CONTRIBUTION |
No minimum contribution required. |
No minimum capital required. |
No minimum contribution required. |
|
ANNUAL RETURN |
Annual statement of accounts and solvency report along with the annual return to be filed with ROC. |
Annual statement of accounts along with the return be filed annually with the Registrar. |
No such return be filed.
|
|
AGREEMENT BETWEEN MEMBERS |
Not mandatory. If not made, the LLP will be governed by LLP Act, 2008. |
Mandatory |
Not mandatory. If not made, the firm will be governed by the Indian Partnership Act, 1932. |
|
OWNERSHIP AND MANAGEMENT |
Generally, in the hands of the same person i.e. the designated partners. |
Ownership is in the hands of shareholders while the management is taken care by the board of directors. |
Generally, in the hands of the same person i.e. the partners. |
|
MAINTENANCE OF ACCOUNTS |
Can be on a cash or accrual basis. |
Specifically, on an accrual basis. |
Can be on a cash or accrual basis. |
What India Expert Offers
India expert is a concept that emerged with the progressive and professional perspective shared by like-minded people. Its aim is to provide the best possible end-to-end incorporation, compliance, consulting, and management consultancy services to clients in India and abroad. We offer a beginning to end solution with regard to Assistance in LLP filling. We have experience incorporating & proving services of LLP compliance firms in Delhi. India Professionals such as Doctor, CA. CWA, CS & lawyers prefer LLPs formation Services. How we help in the LLP Registration services as well as compliance services at Delhi.
- We will process your LLP compliance application within 24 Hours.
- India Expert is Trusted by Most Valuable Startups.
- You may get quality services at your pocket price.
- Get free expert consultancy from experts.
- India Expert understand Startup Needs & their Budget.
- India Expert provides online services of Lawyer CA & CS like LLP Registration, Trademark & Copyright registration, etc.
- Contact us to get start the hassle-free process.
- If you have any plan to do Limited Liability Partnership compliance filling in India, be in touch with our team At info@indiaexpert.in or call or what up at 9555 555 480 to learn more about our services and to schedule a free consultation.