Limited Liability Partnerships (LLPs) are becoming increasingly popular among small and medium-sized businesses in India due to the flexibility they offer in terms of management and liability protection. Like any other legal entity, LLPs are also required to comply with various regulations and file annual returns with the Ministry of Corporate Affairs (MCA).
Step-by-Step Approach to LLP annual filing
Step 1: Obtain Digital Signature Certificate (DSC)
The first step in the LLP annual filing process is to obtain a digital signature certificate (DSC) for the designated partners of the LLP. The DSC is a secure digital key that is issued by the certifying authority and is used to sign the electronic documents. It is mandatory for all the designated partners of the LLP to obtain a DSC as all the documents filed with the MCA are required to be digitally signed.
Step 2: Conduct a Board Meeting
The next step is to conduct a board meeting of the LLP. The designated partners of the LLP should convene a board meeting to approve the financial statements of the LLP and authorize the filing of the annual returns with the MCA. The board meeting should be conducted within six months from the end of the financial year.
Step 3: Prepare Financial Statements
Once the board meeting is conducted and the financial statements are approved, the next step is to prepare the financial statements of the LLP. The financial statements should include the balance sheet, profit and loss statement, and cash flow statement of the LLP. The financial statements should be prepared in accordance with the Indian Accounting Standards (Ind AS) or the Generally Accepted Accounting Principles (GAAP).
Step 4: Prepare LLP Form 8
The next step in the LLP annual filing process is to prepare LLP Form 8. LLP Form 8 is also known as the Statement of Account & Solvency and should be filed with the MCA on an annual basis. The form should be prepared in accordance with the accounting standards prescribed by the Institute of Chartered Accountants of India (ICAI).
Step 5: Prepare LLP Form 11
The final step in the LLP annual filing process is to prepare LLP Form 11. LLP Form 11 is also known as the Annual Return of LLP and should be filed with the MCA on an annual basis. The form should contain the following information:
- Name of the LLP and its registered office address
- Details of the designated partners and their DIN/DPIN
- Details of the contribution made by each partner
- Details of the changes in the partners during the financial year
- Details of the meetings of the partners and resolutions passed during the financial year
- Details of the outstanding loans and borrowings of the LLP
- Details of the assets and liabilities of the LLP
Step 6: Filing of LLP Forms with the MCA
The final step in the LLP annual filing process is to file the LLP Forms 8 and 11 with the MCA. The forms should be filed electronically on the MCA portal using the DSC of the designated partners. The filing fees for LLP Form 8 and LLP Form 11 depend on the capital contribution of the LLP.
Important Points to Consider
- The LLP annual filing should be completed within 60 days from the end of the financial year.
- Non-filing of the annual returns can attract penalties and legal action against the LLP and its designated partners.
- The financial statements of the LLP should be audited if the turnover of the LLP exceeds Rs. 40 lakhs or if the contribution of the LLP exceeds Rs. 25 lakhs.
- The LLP annual filing process can be outsourced to a professional service provider to ensure compliance with the regulations and avoid penalties.