Compliances for Limited Liability Partnership(L.L.P.)
What is LLP?
LLP is a separate legal entity, liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
All LLPs are under obligation to maintain annual accounts reflecting true and fair view of its state of affairs along with statutory requirement such as Annual Return, Balance Sheet, Profit and loss Account, Income tax return every year, Even if LLP does not do any business.
Is LLP liable for Statutory Audit like Company?
According to Rule 24 of LLP Rules-2009, if any of the following condition is attracted then LLP is required to do Audit Compliance like any other entity.
- LLP whose turnover exceeds in any financial year, 40Lakh Rupees, or
- Whose contribution Exceeds 25Lakh Rupees.
Whether LLP is liable for Tax audit?
If LLP is carrying on business or Profession & Total Sales/Turnover exceeds Rs 1 Cr. or a Gross receipt exceeds 25 Lakh then it is liable to get its account under Income Tax Act 1961.
Regular E-Forms Submission:
- LLP-8 :
It is declaration given by all the designated partners of LLP that whether they are able to pay its debts in full as they become due in the normal course of business or not. For the purposes of sub‐section (3) of section 34, every limited liability partnership shall file the Statement of Account and Solvency in Form 8 with the Registrar, within a period of 30 days from the end of six months of the financial year to which the Statement of Account and Solvency relates.
Content of Form-8:
- Part A‐ Statement of Solvency
- Part‐ B‐ Statement of Account, Statement of Income & Expenditure
Note: Form‐ 8 is to be signed by two Designated Partners and certified by CS, CA, CWA (in Whole Time Practice).
Form 11 is Annual Return Contains following things
- of Partners
- Total Contribution received by all partner
- Details of partners, summary of partners
- Details of Body Corporate as a partner
Every LLP is required to file Annual Return within 60 days from the closure of financial year along with prescribed fees.
Due date of filling Form 11 is 30th May for each year.
Consequences if fails to do so:
- If LLP fails to file Form-11 within prescribed time, the designated partners shall be liable to be punishable with fine which shall not be less than Rs. 25000/- which may extend to Rs. 5 lakhs.
- If LLP files their return after due date but paid additional fees up to 300days, no action for prosecution will be taken against partners.
- In case there is delay of 300 days or more, the LLP will be required to pay normal fees, additional fees, and also liable for prosecution.
- The Act also contains provision for compounding of offences which are punishable with fine only.