The Annual Reports of Limited Liability Partnerships :
As the name suggests, Limited Liability Partnerships combine limited liability company ownership with that of a partnership, both of which require at least two partners. Contrary to many other types of business structures in India, LLPs are not governed by many rules. There are, however, a few mandatory declarations that may need to be submitted by LLPs. These declarations are still required even when a limited liability company doesn't operate.
The following annual compliances are required of every registered LLP:
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Accounting Book Maintenance
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Tax returns must be filed
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Accounts and Solvency Statement Form No 8
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Annual Report Form No 11
1.Accounting Book Maintenance :
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Every financial year's book of accounts needs to be ready by 31 March.
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Audit by Chartered Accountants is mandatory for companies with an annual turnover of more than Rs 4 lakhs.
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Accounting records must be kept as a condition of compliance. The penalties for LLPs who fail to maintain a books of accounts range from Rs 25,000 to Rs 5 lakhs.
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Furthermore, non-compliance by such an LLP can result in penalties amounting to Rs10,000 to Rs1 lakh per partner
2.Tax returns must be filed :
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In order to be eligible for the tax cuts, you must annually file the Income Tax Return Form ITR-5.
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A LLP's income tax return must be filed after auditing its accounts.
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By the end of every financial year, LLPs with an annual turn over of Rs 60 lakhs must get their accounts audited and file for income tax returns.
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LLPs are advised to file their income tax returns by 31st July if their accounts have not been audited.
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By 30th November of every year, LLPs engaged in international transactions must get their financial statements audited by a chartered accountant and file income tax returns.
3.Annual Report Form 11:
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Form-11 must be filed by all Limited Liability Partnerships registered under the Limited Liability Partnership Act of 2008.
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A Limited Liability Partnership provides details of its partners and their capital contribution through this form.
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For turnovers under Rs 5 crores and the spouse's contribution to the business under Rs 50 lakhs, digital signatures of the designated partner are sufficient.
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Upon exceeding Rs.5 crores in turnover and Rs.50 lakh in partner funds, a Company Secretary must verify Form-11.
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Form 11 must be completed annually by every LLP, regardless if any commercial transactions were conducted between the LLP and its clients during the year.
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The forms must be filled out by all LLPs and prior to the financial year's end, the form must be submitted to the registrar as soon as possible.
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There shall be a fine of Rs 100 imposed on the owner of the land on each day that Form 11 is not filed in the time frame suggested.
4. Form-8- Financial Statements and Solvency Backstop :
Statement of Accounts and Solvency Form-8 is for statements of accounts. In declaring its financial condition to the ROC, the LLP states that it will be able to meet its liabilities or obligations. By filing a Form-8 to the ROC, the LLP provides its financial statement in its entirety.
Audited LLPs : If the partner contribution in a financial year exceeds Rs 25 lakhs or if there is less than a turnover of 40 lakhs rupees, then those LLPs are not required to have their accounts audited.
Form submission deadline: 30th October of each calendar year is the deadline for submitting form-8.
Benefits of Limited Liability Partnership Filings :
Annual returns provide the following benefits for an LLP:
To avoid penalties: The company will be punished for noncompliance. In the event of periodic non-compliance, LLP might be considered a defaulter and barred from other appointments. An LLP can avoid a penalty or disqualification with annual filings.
Enhancing the Credibility of LLPs: LLPs will be more credible if they file their annual returns and comply with other regulations. Potential consumers and investors view LLPs favorably as a result.
FDI attracted: LLPs that comply with law and regulation have an increased chance of attracting FDI. An LLP can leverage foreign direct investment to increase its capital, which benefits their rapid growth and development. Investors are more inclined to invest in LLPs which have FDI, and they are more likely to develop their businesses.
Final Notes - Annual Partnership Filings :
Business structures such as LLPs pose a compliance challenge and have a low tax obligation. Business models supported by Limited Liability Partnerships would be preferred by aspiring entrepreneurs since this business model has less compliance and works better.
