Mandatory Compliance for an LLP

Mandatory Compliance for an LLP

A Limited Liability Partnership is a business entity which offers the benefits of limited liability to the partners. Here, the owners are not personally liable for the company's debts or liabilities. This business entity is also known as a hybrid entity because it is made with the combination of corporation and partnership. Some benefits and power enjoyed by the LLP are listed below;

  • A limited liability company is a form of business structure that combines traits of both sole- proprietorship and a corporation. It is the least complex business structure.
  • All the partners of this business entity share company profit and report those profits on the individual tax returns, and the actual company does not have to pay taxes on the gain.
  • LLP registration is recognized when the members want to run a business whose sole purpose is the same.
  • If the company faces loss, the members don't require to invest their personal assets to save the company.
  • Powers to open a bank account and employees.
  • Power to sue or sued
  • Power to enter in all types of legal contracts.
  • If you opt for LLP incorporation , you will have A choice between electing a professional who will make all the decisions on how to run a company.
  • When it comes to protecting both business entities act in a different way. For instance, LLP protects the personal assets of its members for any misfortune conduct by another member.

Know about LLP registration process

Post Incorporation of the Limited Liability Partnership:

After incorporation of the Limited Liability Partnership, you should take care of certain compliances and practical aspects associated with it. In this article, we are going to tell you the mandatory ROC compliance of LLP that you have to look at the end of the fiscal year.

Preparation and file LLP agreement with MCA:

After incorporation of LLP, LLP agreement must be filled with MCA within 30 days.

PAN and TAN application:

Online PAN and TAN application of the newly incorporated LLP. The PAN/TAN department send PAN/TAN of the LLP to the registered office address of the LLP.

Bank account opening:

Bank account for an LLP can be opened easily, as it is considered to be a corporate entity. The following documents of the LLP must be submitted for opening a bank account.

Copy of the LLP agreement

Copy of PAN of the LLP

Copy of the LLP Registration Certificate issued by the ROC

Copy of the Resolution to open a bank account List of Designated Partners.

PAN and address Proof of Designated Partner

Appointment of Auditor:

No compulsory requirements for the appointment of auditor. Appointment of the auditor is only mandatory if turnover exceeds Rs. 40 Lakh or capital contribution exceeds Rs. 25 Lakhs.

Filling the annual return with MCA:

The Annual Return Filing of LLP is to be filled in the prescribed format. I.e. Form-11 with MCA. The stated Form provides information regarding the partners of the LLP. It is also an indication of whether there is any change in management. Any change in the partners or management of the LLP during the reporting period is to be intimated in the aforesaid form so the Ministry should updated information regarding the partners. Form 11 or Annual Return is applicable to those LLP's which were registered till September 30September 30 2017. For LLPs registered after  1 October  2017, the return can be filed in the year 2019.

Statement of account and insolvency:

Form-8 deals with the filing the statement of account and insolvency of the LLP. Like every business, it is also mandatory for the LLP to maintain books of accounts and financial statements. The account is required to be furnished before the Ministry every year in the Form mentioned above, along with the necessary details and information asked in the prescribed format. Form 8 must be filed within 30 days from the end of 6 months of the financial year along with some prescribed fee. This must be digitally signed by the designated directors and it is must be certified by a chartered accountant/ company secretary/ cost accountant. If you are running an LLP, you have to file an annual return and statement of account and insolvency at the end of the financial. To make this process hassle-free, it is advisable to take the support of a legal consultant. Unilex business consultant is one of the fastest-growing legal advising platforms on the internet, which offer you all types of incorporating, filing and closing services related to all business entities. It should be noted that LLPs, whose annual turnover exceeds Rs. 40 lakh or whose contribution exceeds Rs. 25 lakh are required to get their accounts audited by a qualified Chartered Accountant mandatorily.

Income tax filing:

All LLP registered in India are required to file a tax return every year, irrespective of revenue or profits. Hence, even an LLP which is dormant not having undertaken any transactions must file an income tax return.

LLPs must file an income tax return using Form ITR 5. Form ITR 5 can be filed online through the income tax website using the digital signature of the designated partner. After filing LLP tax return, it is advisable for the taxpayer to print two copies of Form ITR-V. One copy of ITR-V, signed by the assessee, should be sent by ordinary post to Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka). The other copy can be retained by the assessee for his record.

Benefits of LLP registration

Penalty:

They have been amendments in the tax laws. These laws come into effect from April 11 April 11, 2018. As per the same, taxpayers who do not file the return on time will have to shall out the penalty of up to Rs. 10000. A two-level penalty in this regard- A fee of 5,000 shall be payable if the return is furnished after due date on or before December 31 December 31 of assessment of the year and fee of 10,000 shall be payable in any other cases.

NON-COMPLIANCE ATTRACTS A PENALTY: Care must be taken again to ensure LLP Annual Return is filed on time, as non-compliance attracts a penalty of Rs.100 per day of default.

Final Say:

Running a business, whether it is private limited, one person company or limited liability partnership, is not an easy task. But, if you run your business by following all rules and regulations, you would definitely protect your business from a heavy penalty and increase it credibility. Business owners who avoid filing mandatory compliance at the end of the year will face many obstacles; sometimes their company also get defunct. That's why it is advisable to file all mandatory compliance before the due date and run your business hassle-free.

I hope now you understand the importance of filing the annual compliance of the limited liability company. In the event, if you forget to file the annual compliance and come across with heavy penalty, without thinking much, feel free to contact a legal consultant. Unilex Business consultant's professionals will help you and save your company from the defunct.