Partnership has been the most desirable form of business
since ages. Just by adding a prefix i.e ‘Limited Liability’, A new form of
business is created which is Limited Liability Partnership. The ulterior motive
for constituting this form of business is to cop up with the drawbacks of
partnership and to commemorate with the stringent requirements of company.
So, Limited liability partnership is a form of entity which entails features of a partnership firm and a company. The LLP is managed by its partners and it is a separate legal entity from its partners.
The incorporation process of LLP is simple and it does not require much compliance formalities, hence, LLPs are preferred by Professionals, Micro and Small or closely-held businesses.
The concept of Limited Liability Partnership has been brought by way of enforcing Limited Liability Act, 2008.
1. Filing of Annual Return
2. Filing of Income Tax Returns
3. Maintenance of Books of Account
a.) FORM-8
Form-8 consists of the statement of Account and Solvency. It consists of information related to the statement of assets of the LLP and liabilities and statement of income and expenditure of the LLP.
Form 8 should be filed within 30 days from the end of 6 months of the end financial year. i.e. by 30th October of each financial year.
Designated partners must sign the form digitally. Further, it must be certified by a chartered accountant, auditor or the accountant of the LLP.
There are two parts in Form 8. They are:
Part A – Statement of Solvency
Part B – Statement of Accounts, Statement of Income & Expenditure
b. FORM 11
Form -11 consist of annual return. It contains the details of all the partners, their contributions towards the LLP, etc.
Form-11 should be filed within 60 days of the end of financial year. i.e. on or before 30thMay every year.
It must be Digitally signed by one of the Designated Partners of the LLP. In case total obligation of contribution of partners of the LLP exceeds Rs. 50 lakhs or turnover of LLP exceeds Rs. 5 crores, then LLP Form 11 needs to be certified by a Company Secretary in whole time practice.
Basic details like Total obligation of contribution, total contribution received by partners of the LLP, Summary of Designated Partners and Partners etc.
Further, details of LLP and/ or company in which partner/ designated partner is a director/ partner is attached to the form.
General Questions for both the Forms i.e. Form 8 and Form -11
To maintain the active status of the LLP it is required to file the forms even if no transaction has taken place during the year so that MCA is updated with the state of affairs of LLP.
The filing fees is Rs. 50 for Form-8 and for Form-11.
The penalty of Rs.100/day if you have not filed this form.
All LLPs are required to maintain its books of accounts on cash basis or accrual basis. Other relevant documents like incorporation document, names of partners and changes made, proof of fee payment, statement of account & solvency & annual return filed by LLP should also be kept at its registered office. The books of accounts shall also be preserved in the registered office of the LLP for the specified period.
Every LLP has to file income tax return for every year. Since LLP is a separate legal entity, so along with partners income tax return you have to file LLP’s income tax return as well within due date.
The requirements mentioned above are compulsory to be followed irrespective of any number of transactions or amount of turnover. Limited Liability Partnership which is flourishing in the business world has bear the burden of multiple compliances to avoid the liability arising from fines and penalties. But is it only for avoiding penalties? The answer is no. Since LLP has to comply way fewer compliances as compared to company it is always better to file all the forms and returns before the due date to escape hefty penalties with timely annual LLP compliance filing.
For more information on this visit TAXAJ.
Posted By Twinkle