A Complete Information about Limited Liability Partnership along with compliance after incorporation and annually..

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Applicable Act:

Limited Liability Partnership Act, 2008

 

Meaning:

Limited Liability Partnership (LLP) allows for a partnership structure where each partner’s liability is limited to the amount they put into the business. It therefore can exhibit elements of partnership & corporation. In LLP each partner is not responsible or liable for another partner’s misconduct or negligence.

 

Advantages:

  1. LLP is separate legal entity to the members; hence liability of members is limited to the extend their contribution.
  2. Flexibility because of written agreement.
  3. Identification as a legal person, it can buy, rent, lease, own property, employ staff etc. if necessary.
  4. Corporate ownership: LLP can appoint two companies as members of the LLP. In a company at least one director must be real person.
  5. An LLP should have designated and non-designated members but at least two designate members.
  6. Protecting the partnership name. in other words, prevent to use the similar name by any other person.
  7. Convenient: easy to start than company.
  8. No Minimum capital required.
  9. No limit of owner of business
  10. Lower registration cost compared to company.
  11. No compulsory audit until a specific limit
  12. Lesser compliances.

 

Disadvantages:

  1. Public disclosure of financial records.
  2. Income tax rate high than in case of individual.
  3. Profit can not be retained in the same way as a company limited by shares.
  4. An LLP must have at least two members, if one member leave then LLP may be dissolve.
  5. Residential address historically recorded at company houses; hence communication problem may occur.

 

 

Compliances after incorporation

 

  1. LLP Agreement require to execute and a copy has to be filed with the registrar of companies in Form-3 within 30 days of incorporation. In case of Delay penalty would be Rs. 100 per day till the actual date of filing.
  1. Application of PAN to the Income Tax Department in prescribed form along with fees.
  2. Application of TAN to the Income Tax Department for smooth running of business.
  3. Opening Bank account in the name of LLP:

Documents required:

 Certificate of incorporation of LLP

 LLP Agreement & Form FiLLip & Form 3

 PAN

 Resolution by partner

 KYC details of Designated partners & other partners

Cheque of initial deposit of amount to open bank account


  1. Books and accounts of LLP: every LLP has to prepare and keep the books of account in double entry system of accounting and follow all the compliances as prescribed.
  2. Shop and Establishment registration has to taken within 30 days in every state where the business is to established.
  3. Professional Tax registration – employer & employee (Enrolment Certificate): such registration has to taken within 30 days if LLP employ people more than specified limit. And renewal is required every year.
  4. Infusion of initial capital by subscribers to memorandum within 60 days.
  5. Appointment of Auditor: mandatory if Capital contribution is more than Rs. 25 Lakh or Annual turnover is more than Rs. 40 Lakh and get its account audited by a Chartered Accountant in practice.
  6. GST Registration required if turnover exceed the specified limit as mentioned in GST Act.
  7. Trademark registration if required. 


Annual Compliances by an LLP

 

  1. Annual Return Filing:

a.      Form 8 (statement of Account and solvency)

It has two parts - Part A (statement of solvency)

                              Part B (statement of accounts, statement of income & Expenditure  

Form 8 has to be filed by LLP within 30 days from the end of six month of financial year to the ROC along with the fees. Such form must be signed digitally by at least two designated partners and certified by Chartered Accountant.

In case of failure penalty will be levied of Rs. 100 per day till the actual date of filing.

 

b.      Form 11 (Annual Return)

It contains complete details of each partner & their contribution & such form has to be file to ROC along with fees within 60 days from the end of financial year (i.e. on or before 30th May of each year)

In case of failure penalty will be levied of Rs. 100 per day till the actual date of filing.

 

  1. Filing of Income Tax Return:

Income tax return has to be filed in form ITR-5 by the 30th September of each assessment year.

The accounts are required to be audited by Chartered Accountant if turnover exceed Rs. 40 Lakh or Capital exceed Rs. 25 Lakh.

In case of International transaction LLP has to file form 3CEB and the due date of income tax return filing in such case is 30Th November of each assessment year.

 

  1. Books of Accounts: every LLP has to maintain proper books of accounts on cash or accrual basis and in a true and fair view.

In case of failure punishment will be:

 Rs. 25,000 to 5,00,000 to LLP

 Rs. 10,000 to 1,00 000 to All Designated partners.


to download in PDF Format click on the link below

https://drive.google.com/file/d/1LH7ew_mYIq-GDnrS4VB_Ev-G6BhT-nNV/view?usp=sharing


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