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Limited Liability Partnerships: ROC and Non-ROC Compliances
While we talk about the perks of partnership firms and companies, there are certain disadvantages associated with the same. A partnership firm has lesser compliances when compared to the companies, however, the liability of the partners is unlimited. Whereas in the case of companies, the compliances associated with regulatory filing are more as compared to partnership firms. Also, company is a preferred format once the business starts to flourish as it is relatively easier to involve brilliant minds on the board as well as raise funding.
But, what about a person who does not want to get involved in compliances and also wants to limit his liability? Well, Limited Liability Partnerships are the solution. Limited Liability Partnerships (LLPs) are partnership firms where the liability of the partners is limited only up to the amount of capital contributed by them. The regulatory body for LLPs is the Registrar of Companies - Ministry of Corporate Affairs. The ROC compliances of LLP are comparatively less than the companies. Let’s take a look at the ROC compliance checklist for LLPs.
LLP ROC Compliances
Following are the ROC compliances for LLPs in India:
- LLP Form-3: The partners of the LLP shall execute the LLP agreement and file the same with the Registrar of Companies within 30 days of incorporation of the LLP in LLP Form-3.
- Filing of Annual Return: The LLP shall file an annual return in Form-11 within 60 days from the closure of the financial year i.e., 30th May each year. It shall be filed irrespective of the turnover of the LLP. The details disclosed in Form 11 include the basic information about the LLP and details of the partners / designated partners. Other details include the total contributions made by the partners of the LLP and the details of any notices received towards the penalty levied or compounding of the offenses that are committed during the financial year.
- Statement of Account and Solvency: The LLP shall file its Statement of Accounts and Solvency in Form-8 within 30 days after the expiry of 6 months from the closure of the financial year i.e., till 30th October. In the Statement of Account and Solvency, the LLP shall provide the details about the transactions undertaken as well as the financial position at the end of the financial year. LLP shall also declare the following details:
- A declaration whether the turnover is above or below Rs. 40 lakhs.
- A declaration that the LLP has already filed a statement indicating creation, modification, or satisfaction of the charges till the present financial year.
- A declaration that the partners or the authorized representative have ensured the preparation and maintenance of adequate accounting records.
- Audit under the Limited Liability Partnership Act, 2008: As per Rule 24 of the LLP Rules, 2009, the accounts of every LLP shall be audited by a Chartered Accountant in practice. However, if the turnover of the LLP does not exceed Rs. 40 lakhs or whose contribution does not exceed Rs. 25 lakhs in any financial year, then they are not required to get their accounts audited. In such a case, the partners of the LLP shall include a statement along with the Statement of Accounts and Solvency that they acknowledge their responsibilities with respect to the preparation and maintenance of books of accounts in accordance with the requirements of this act.
LLP Non-ROC Compliances
Apart from LLP ROC filing, LLP shall also ensure certain non-ROC compliances as well. This includes:
Income Tax Return: The LLP is required to file its income tax return before the due date of 31st July each year. However, if the turnover of the LLP crosses the specified threshold limit, then it shall get its accounts audited by a Chartered Accountant as per the Income Tax Act, 1961, whereby the due date specified is 30th September. Presently, the threshold limit is Rs. 1 crore for business and Rs. 50 lakhs for profession. Apart from that, LLP shall also ensure compliance with other income tax provisions like TDS/TCS, advance tax, Alternate Minimum Tax, etc.
GST: If the LLP has obtained registration under the GST act, then the LLP shall ensure compliance with respect to the filing of GST returns and other requirements of the GST act.
Other Laws: If the LLP undertakes certain transactions that attract the provisions of other laws, then the LLP shall ensure compliance with the requirements of such other laws as well.
Why Should ROC Compliance for LLP Be Adhered To?
Annual ROC compliances for LLP shall be adhered to as non-compliance can attract fines and penalties. If the LLP delays the filing of Form 8 or Form 11, then a penalty of Rs. 100 per day shall be levied for each form from the due date of filing the form till the date of actual filing.
FAQs about Bookkeeping & Accounting
If an LLP is incorporated on or after 1st October of a financial year, then the LLP can close its first financial year either in the upcoming or the next 31st March i.e., the LLP can file its first financial year details after a period of 18 months as well.
The forms applicable for conversion of partnership firms or companies to LLP include: Partnership Firm: In case of conversion of partnership firm into an LLP, Form-17 shall be filed along with Form-2 for conversion and incorporation of LLP. Company: In case of conversion of a company into an LLP, Form-18 shall be filed along with Form-2 for conversion.
No. Only the unlisted public companies and private companies can be converted into an LLP.
The user shall log in to the LLP portal. Following documents are available for inspection by any person on payment of fees of Rs. 50: Incorporation document Annual Return Statement of Accounts and Solvency Name of the partners and changes made therein, if any
If there is an admission or resignation of any partner in the LLP, the LLP shall intimate the same to ROC by filing Form-3 and Form-4. While Form-3 is for furnishing the information relating to the LLP agreement and changes made therein, Form-4 is in respect of appointment, cessation as well as change in details of the designated partners.