There are several things to be done to maintain compliance for a Limited Liability Partnership (LLP) and avoid heavy penalties for non-compliance under the law. For example, the return filings must be filed periodically. As compared to the compliance requirements placed on the private limited companies, Limited Liability Partnerships have only a few compliance requirements to follow each year, which is quite low. However, the fines seem to be quite high. LLPs might be charged up to INR 5 lakh in penalties for non-compliance, whereas a Private Limited company might only be charged INR 1 lakh in penalties for non-compliance.
Due to the fact that Limited Liability Partnerships are separate legal entities, it is the responsibility of the elected partners to maintain a proper book of accounts and file an annual return with the Ministry of Corporate Affairs (MCA) in accordance with the law.
Except for limited liability partnerships with annual turnover over Rs.40 lakhs and contributions over Rs.25 lakh, auditing of their books of accounts is not required. Hence, an LLP is not required to get their books of account audited if it fulfils the above-mentioned condition, so the annual filing process can be simplified.
The Statement of Account & Solvency for Limited Liability Partnerships must be filed within thirty (30) days from the end of the financial year, and the Within sixty (60) days of the end of the financial year, the annual return must be filed.
Limited Liability Partnerships are required to maintain a financial year from April 1st to March 31st, similar to companies. Every LLP is required to submit a Statement of Accounts and Solvency by October 30th of each financial year, and its annual return is due on May 30th every year even if the LLP has not completed any business during the current fiscal year. Even if the LLP hasn’t begun any business, some of the LLP annual filing are mandatory.
Solvency and Accounts Statements
As part of its obligations as an LLP, all enrolled LLPs are required to keep accurate books of accounts and submit them to the state in Form 8, which contains data regarding the profit made, other financial data related to the business, and other financial data related to the business. As well as being attested by the signatures of the designated partners, Form 8 should also be certified by a chartered accountant, a company secretary, or a cost accountant who is actively involved in the business. There is a fine of Rs.100 per day if you fail to file the statement of accounts and solvency report for the financial year by the stated due date. The due date for filing form 8 every year is October 30.
Filing of the Annual Return
In order to file annual returns in accordance with the law, the LLPs should fill out the prescribed form-11. The form is considered to be a summary of the management affairs of the LLP, including the number of partners as well as their names. Moreover, form 11 must be filed by 30th May every year.
Income Tax Act Filings and Audits
According to the Limited Liability Partnership Act, 2008, Limited Liability Partnerships with a turnover of more than Rs.40 lakh or a contribution of more than Rs.25 lakh are required to have their books of account audited by practising chartered accountants. In the case of an LLP required to have his books audited, September 30th is the deadline for filing the tax return.
Note: With effect from AY 2021-22 (FY 2020-21), the threshold limit for a tax audit has been increased to Rs.5 crore if the taxpayer’s cash receipts are limited to 5% of gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of aggregate payments.
LLPs with no tax audit deadline are due July 31st for taxes. Limited Liability Partnerships that have engaged in any international transactions with associated enterprises or have undertaken specified domestic transactions are required to file Form 3CEB. It should be certified by a practicing Chartered Accountant. Limited Liability Partnerships that must file this form can do so by 30th November.