A COMPLETE GUIDE TO LLP
When two or more persons desires to start a business, they have so many alternatives for the type of entity which can be advantageous for them like Partnership Firm, Private Limited Company or LLP. Here we will understand everything about LLP.
What is LLP?
· LLP stands for Limited Liability Partnership.
· LLP is a hybrid form of Company and partnership, since it contains elements of both a corporate structure as well as a partnership firm structure.
· LLP is governed by LLP Act, 2008.
· LLP is a body corporate.
· LLP is s separate legal entity i.e. LLP is liable to the full extent of its assets but liability of partners is limited to their agreed contribution.
· Every LLP shall use words “Limited Liability Partnership” or its acronym “LLP” as the last words of its name.
· LLP holds status of perpetual succession i.e. LLP can continue its existence irrespective of status of its partners.
· Liabilities of partners in LLP are limited up to share in capital.
· In LLP, ownership and management are same, i.e. partners are the owners as well as the managers.
· Governing Document for LLP is Agreement like a partnership deed, which is called LLP Agreement. LLP Agreement should be in written form on stamp paper of such value which is prescribed state wise.
· LLP formation cost is very less as compared to Private Limited Company.
WHO ARE PARTNERS?
· People constituting LLP are called Partners and not directors.
· No ceiling limit for no. of partners in LLP. But minimum 2 partners are required to form LLP.
· Mutual rights and duties of the partners are governed by LLP Agreement between partners.
· Body Corporate or individual can be a partner in LLP but only an individual can be a designated partner.
· LLP must have at least 2 designated partners. One designated partner must be Resident in India.
· Every designated partner needs to obtain DPIN on the lines similar to DIN for directors.
· The minimum capital with which an LLP can be incorporated is Rs. 10000. However there is no upper limit.
· LLP cannot raise funds from public.
REGISTRATION OF LLP
· LLP needs to be registered with ROC.
· Identify designated partner and file their consent in “FORM-9”.
· Every designated partner should have DSC of class-II.
· Apply for DPIN in “FORM DIR-3”.
· Every LLP should have a unique name which should not resemble with any existing company, LLP or any registered or applied Trademark. Name should be approved by ROC. To obtain name approval one has to file Form RUN-LLP.
· Every LLP shall have a Registered Office.
· After name approval LLP incorporation form to be filed with ROC with the documents of partners and registered office in “FORM-2”.
· Track online and rectify deficiency, if any.
· When the above form is approved, LLP incorporation Certificate is issued along with LLPIN.
DOCUMENTS REQUIRED FOR REGISTERATION
· Documents for Registered Office
ü Proof of Registered office
ü Utility Bill (Latest)
ü NOC from premises Owner
ü Signed Declaration from partners
· Documents of Designated Partners
ü 2 Photographs of each partner
ü PAN of each partner
ü Identity Proof of each partner
ü Address Proof of each partner
ü DSC of each partner
POST REGISTRATION COMPLIANCES
· LLP Agreement needs to be filed with ROC within 30 days in “FORM-3”.
· Details of Partners also needs to be filed with ROC within 30 days in “FORM-4”.
· Further every time any changes occur Form 3 & 4 needs to be filed within 30 days.
· Apply for other Registrations like PAN, GST and TAN etc.
· Every LLP needs to maintain annual accounts.
· Annual accounts, audit report (if applicable) along with statement of accounts and solvency needs to be submitted to ROC.
· Accounts of LLP needs to get audited by Chartered Accountants only if Turnover of LLP exceeds Rs. 40 Lakhs or contribution exceeds Rs. 25 Lakhs.
ANNUAL FILLING OF LLP
· Annual Filling is the major compliance under LLP Act, 2008 where LLP needs to comply the same with ROC.
· It has to be done every year mandatorily, otherwise one has to bear with huge penalty.
· LLP needs to file its financials i.e. Statement of Accounts and Solvency within 30 days from the end of 6 months of the Financial Year i.e. by 30th October every year for the respective previous financial year in “FORM-8”.
· Also an LLP needs to file annual return containing various information such as basic details of LLP, partners details etc. within 60 days from the closure of its financial year i.e. by 30th May every year for the respective Previous Financial year in “FORM-11”.
· Fees and Penalty for FORM-8 and FORM-11 are as under:
|Contribution < Rs. 1 Lakh||Rs. 50|
|Contribution > Rs. 1 Lakh but upto Rs. 5 Lakhs||Rs. 100|
|Contribution > Rs. 5 Lakhs but upto Rs. 10 Lakhs||Rs. 150|
|Contribution > Rs. 10 Lakhs||Rs. 200|
Penalty: If there is delay in filling Form-8 and Form-11 of LLP RS. 100 Per Day called additional fees till the forms are filed shall be levied.
· It has been provided that in case LLPs file relevant documents after their due dates with additional fees up to 300 days, no action for prosecution will be taken against them.
· In case there is a delay of 300 days or more, the LLPs will be required to pay normal filling fees, additional fees and shall also be liable to be prosecuted.
· The LLP Act also contains provisions for compounding of offences which are punishable with fine only.
· Every LLP needs to file Income tax return every year in ITR-5. The last date of filling of return for LLP whose accounts are not required to get audited, is 31st July and for other LLPs whose accounts needs to get audited, is 30th September.
Documents available for public inspection
Following documents will be available for inspection by any person on payment of prescribed fees to ROC.
· Incorporation Documents
· Names of Partners and charges, if any
· Statement of Accounts and Solvency
· Annual Return
Fee for such inspection of an LLP is Rs. 50 and fees for certified copy or extract of any document shall be Rs. 5 per page.