A Limited Liability Partnerships(LLP) is a partnership in which one or all partners have limited liabilities. In LLP, one partner is not responsible for another partner’s misconduct or negligence. LLPs allow a partnership where each partner’s liabilities are limited to the share they have in business. LLPs have been emerging ever since 2013, when the Companies Act was passed. Most of the people are choosing LLP as it is a simple and less complicated compliance. One has to be very careful about the compliances of LLP as it involves per day penalty. In this article, we shall cover all the mandatory compliances of the LLP.
·Mandatory compliances for an LLP:
A. Filing of Annual Return- Form 11
B. Filing of Statement of the Accounts or Financial Statements- Form 8
C. Filing of Income Tax Returns- ITR 5
All LLPs registered with the Ministry of Corporate Affairs need to file these forms on the Income tax portal/MCA portal:
·Annual return of LLP- Form 11
Every LLP is required to fill Form 11 within 60 days from the closure of a financial year i.e. before 30th may every year. It contains details of the number of partners, total number of partners and total contribution received by all the partners. It is important to file Form 11 on time to avoid penalty of Rs. 100/per day and other penal provisions. Attach details of companies/LLPs in which the partners are a director or a partner.
·Statement of Account and Solvency- Form 8
Every LLP should file Form 8 within 30 days before the end of 6 months of the financial year. Form 8 is divided into 2 parts:
Part A- Statement of solvency
Part B- Staments of Accounts, Income and Expenditure
Attach Audited financial statements. The form should be digitally signed by both the partners and should be certified by a practising professional. Penalty of Rs. 100 per day until it is compiled. Other penal provisions are also there.
·Filing of Income Tax Return by LLP- ITR-5
All LLPs registered in are required to file income tax return each year, irrespective of loss or profits. Every registered LLP with an annual turnover of less than 40 lakhs and the partners obligation of contribution is less than 25 lakh shall file ITR-5 on or before 31st July. And, every LLP having a turnover of more than 40 lakhs and partner’s contribution of more than 25 lakhs shall file ITR-5 on or before 30th September.
·Why to choose LLP?
Most of the LLPs are managed by professionals who have a lot of experience and clients between them. The most important benefit of LLP is a balance of management control with reduced liability exposure. The partners are not personally liable and cannot be forced to pay a business debt or liability with personal property or assets. It is flexible and the distribution of the profits is determined by written agreement between the members. You can operate the LLP with different levels of membership.