Compliance requirements for a Limited Liability Partnership

Limited Liability Partnership is one of the most popular and beneficial ways of setting up a business. With benefits like limited liability, unlimited partners, a combination of benefits from a corporation and a partnership, etc., it becomes one of the most widely formed business entities across India. However, what are the compliance requirement, what ideal annual compliance for Limited Liability Partnership package should contain, is it complicated? All these questions shall be addressed by learning more about the compliance requirements of an LLP company.

·         LLPRegistration

The LLP has to be registered with the Registrar of Companies as well as the Ministry of Corporate Affairs.

·         Filing of Form 11

Form 11 is the annual return for an LLP and includes details about any restructuring that took place during the financial year. It also consists of details with respect to changes in the board of directors or similar management changes. This Form has to be filed in about 60 days (May 30^th, year) after the end of the financial year (31^st March, year).

·         Filing of Form 8

Form 8 is nothing but the statement of accounts and solvency. This Form includes various information like annual accounts, profit and loss account details, balance sheet, and statement of accounts. Annual accounts are nothing but proper accounting books that are either on accrual or cash basis. Similarly, the Statement of accounts also referred to as solvency statement needs to be prepared by the end of the financial year, which is 31^st March, year. If a single partner contributes beyond Rs 25L or the total turnover exceeds Rs 40L, there is a statutory requirement of audit from a certified auditor.

An important fact to be noted in the annualcompliance for LLP company is that filing of Form 8 and Form 11 is mandatory irrespective of the activity of the LLP. Even if the LLP has zero activity, to remain as a business entity in the eyes of law, it has to file these two forms.

·         Incometax return filing

This is the most integral part of annual compliance for a Limited Liability Partnership. This is why most LLPs use compliance services. Unlike a sole proprietorship or traditional partnerships, the income is taxed at the entity level and not at the beneficiary level. The deadline to file a return for an LLP can be neck to neck and hence, it is important to keep everything up to date and not wait for the financial year to end.

For LLPs which require an audit, the returns can be filed by 30^th November if there was any international transaction and 30^th September if there wasn’t any. For LLPs that do not require an audit, the return has to be filed by 31^st July. These dates may be pushed if there are significant upgradation in tax slabs or software updates. However, the deadline more or less is consistent and unlikely to be postponed further in normal circumstances.

·         Income tax planning and zero penalty scheme

There are several tax components like Alternative Minimum Tax, Surcharge, Tax structure, etc. The key focus of annual compliance for the LLP company should be to minimize such components and their impact to the minimum by fruitful planning and decision making. Avoidance of penalty and timely payment of dues is another key aspect.

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