LLP stands for a Limited Liability Partnership. As the name suggests, these firms are required to file returns periodically to ensure compliance and save it from being hit by heavy penalty for non-compliance. As a matter of fact the compliance need to be fulfilled by a Limited Liability Partnership each year is very low as compared to the private limited companies. However, the fines are heavy, which can be 5 times more than the Private Limited company for not ensuring compliance with LLP annual filing.
Types of LLP Annual Filing Forms
Following types of forms are required for filing of annual return of LLP:
- Form 3: LLP annual return filing is a process is done by the Partners of an LLP wherein they are required to execute an LLP Agreement along with a copy, which needs to be filed with the Registrar or Companies in LLP Form 3. This form needs to be filled and submitted within 30 days of incorporation of LLP.
- Form 8: An LLP is mandated to prepare and close its accounts March 31stevery year, at the time to which Form 8 must be filed by at least two Designated Partners in the presence of Registrar within a time frame of 30 days after the completion of six months of Financial Year.
- Form 11: Also known as AnnualReturn Form, this document entails summary of all the designated partners along with highlighting any kind of change in the LLP running and management. This form much be filed within 60 days from the closure of the running financial year.
Benefit of LLP Annual Return Filing
Not only from the perspective of enduring compliance but LLP annual filing has its own set of advantages:
- Minimum contribution not needed: LLP filing annual returns are freed from maintainingminimum capital requirement, which means it can be managed with minimum possible capital.
- No limit to business owners: LLP required at least 2 partners whereas there is no upper limit of any partners.
- Less registration cost: The registration cost of LLP is extremely low as compared to private limited or a public limited company.
- Compulsory audit not needed: All companies be it private or public, are required to get their accounts audited which is not a mandatory requirement in case of Limited Liability Partnership.
- Dividend Distribution Tax (DDT) is not applicable: In case a owners of a company withdraws profits, he or she is liable to additional tax liability which is to be paid in the form of DDT @ 15%. But in case of LLP, no such tax is payable by the owners / partners.
What are the Checklist Items for Filing of Annual Return of LLP Compliance?
There is a list of documents that are considered as mandatory to file an annual return with MCA each financial year.
- Form 11: It is a statement of annual return which is to be filed with the registrar within 60 days as soon as the financial year closes. Such returns must be filed on or before 30th May every year.
- Form 8: This form is considered as a statement of accounts which every LLP is required to prepare and close the 31st March every year. It must be filled by two Designated Partners with the Registrar within 30 days of six months of Financial Year, which is 30th October every year.
LLPs are fined with a late filing penalty of Rs. 100 per day of default in case this is missed.
What are the important requirements of LLP annual filing compliance?
LLP is a kind of legal business entity which imparts its members with the required flexibility of organizing internal structure. Also, known as a traditional partnership, such form of company is governed by the Limited Liability Partnership Act, 2008. Such companies have to meet some of the important requirements of LLP annual filing. LLPs that are registered are required to file annual returns and statement of accounts for each financial year no matter if the firm is profitable or not. Important requirements of LLP annual filing include Form – 8 (Statement of Accounts), Form – 11 (Annual Return), and Income Tax Return (ITR-5 Form).
What are the major LLP Annual Filing Compliance’s?
Some of the core annual compliance for an LLP are detailed below:
- Statement of Account and Solvency Filing: this needs to filled out as Form 8 wherein LLPs are required to keep their books of accounts in the double-entry technique.
- Annual returns filing: LLPs must submit their annual returns with the Registrar of Companies as Form 11 in the predetermined structure
- Tax return submission: LLPs must fill Form ITR 5 while filing their income tax return. The same can be downloaded or submitted online with the help of designated partners’ digital signatures. These returns must be submitted by the financial year end as per the Income Tax Act to the IT Department.
- ROC Compliance and MCA: In line with theLLP agreement’s rules, all partners are required to invest equally. Thus, LLPs must maintain their books of accounts as per regulations stated by MCA and ROC.
What is the filing of annual return of LLP process?
The step-by-step guide on e-filing for an LLP are jotted below:
- Category selection: Applicant are required to select a category for downloading the eForm from the LLP portal.
- Form filling:As soon as the form is downloaded, the applicant needs to fill up the information in the downloaded e-form.
- Upload documents: Thirdly, applicant is required to upload all the necessary and supporting documents along with an applicant or a representative’s digital signature.
- Check form: When the documents and signatures are attached, companies are required to click the ‘Check Form’ button to check the form for all mandatory fields, mandatory attachment(s) and digital signature(s).
- Pre-scrutiny:Thereafter, the form must be uploaded for the process of pre-scrutiny which is available under the Services tab for document and signature verification.
- Fee payment: Lastly, the applicant needs to pay the fee calculated by the system via credit card, internet banking, NEFT, Pay Later or through challan at the bank counter.
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What are the annual compliances for the LLPs?
Broadly, there three compulsory compliances if you are in an LLP. These include filing of annual returns, presenting books of accounts and filing of income tax returns.
Is Form 8 mandatory to be filed by the LLPs?
LLP Form 8 also known as Statement of Account & Solvency must be filed every year by all LLPs registered in India with the Ministry of Corporate, regardless of their turnover.
What all compliances must be adhered by the partners in LLP?
LLP partners must execute an LLP Agreement a copy of which must be filed with the Registrar or Companies in LLP as Form 3 within 30 days of LLP incorporation.
What compliance exemption are applicable to LLPs?
All LLPs are exempted from getting their books audited except in case their annual turnover exceeds Rs. 40 lakhs or the contribution exceeds Rs. 25 lakh.
Is it mandatory to hold a board meeting for the LLPs?
No, there is no such requirement for LLPs.
Why should LLPs comply with the ROC Compliance?
LLPs must adhere to the compliances within the specified due dates as in the event of failure, a heavy penalty is imposed on them, which is even higher than PLCs.
What are the applicable taxes for LLPs?
LLPs have to comply with tax rates of approx. 30% of their total income. In case this amount exceeds Rs. 1 crore, a surcharge of 12% is levied.
What all documents are required to File LLP Form 11 by an LLP?
To fill Form 11, LLPs must have an ID number, registered office address, business classification, principal business activities, details of designated partners and partners, obligation of contribution of partners, total contribution received by all partners, details of penalties imposed on the LLP or of compounding offenses, etc.
What is the fee for LLP annual return filing?
The designated partners have to jointly pay a government fee for filing Form 11 which is Rs. 50/. However, LLPs are fined with a late filing penalty of Rs. 100 per day of default in case this is missed.
Can we close LLP without annual return filing?
In the event when the LLP has not carried out any business activity or did not file any income tax return, there is no need for annual return filing.