Running a business of your own is not an easy and comfortable process, as it seems to look like. There are lots of legal compliances and annual filings to be processed at regular intervals to stay on the same page with the company and the registered offices. The annual compliance for LLP is mandatory in many aspects and being the new company to be incorporated, you must be well-aware of the facts and regulations that can bring your business partnership at ease and both the partners have a mutual acceptance of the compliance outcomes.
There are many things to be taken care of, once the company gets incorporated and the policies are made mandatory to be followed on time. Yet, many newly incorporated businesses are left unaware of the legal terms and end up violating them. As a result of this, the business has to face a tremendous loss and penalty to be fulfilled for violating the tax returns, filings, accounting, and so on.
Let us then see the annual compliance of LLP, mandatory compliance for an LLP, audit requirement LLP, and limited liability partnership compliance.
The annual compliance for LLP can be stated as the agreement that can serve all the rights and duties of both the partners once the company gets incorporated. The Limited Liability Partnership Compliance consists of the following steps to be considered:
1) Filing LLP Agreement
The LLP Agreement administrates the rights and duties of all the partners with LLP. After the company gets incorporated in an LLP, the Agreement must be filed with the Ministry of Corporate Affairs under 30 days maximum. LLP agreement is compulsory for all LLPs and even if a specific LLP Agreement is absent, the Agreement must be performed,
Failing to file LLP Agreement within 30 days of incorporation of an LLP can lead to a heavy penalty of Rs.100 each day of avoidance with no upper limit on the maximum fine. Therefore, one must take care of the LLP agreement and make sure it is properly executed and filed within the due date
2) LLP Stationary
LLP Seal: Under Annual compliance for LLP, the LLP seal is required for opening the bank account and applying for PAN for the company. This requires two rubber seals. One, round type with LLP name and the other LLP name with designation care needed to be purchased while incorporation for an LLP.
Letterhead: LLP stationary includes the letterhead, invoice, official documents, and much more. All are required to be prepared with the LLP name and then registered to the office of the LLP.
Book of Accounts:
Under Limited Liability Partnership Compliance, a proper book of accounts on cash and growth is required to be maintained. This book can also be maintained manually in the register kept at the registered office or electronically via accounting software.
3) LLP PAN Application
After the incorporation of an LLP, PAN card is required to be applied online. The PAN application (Form 49A) is used for applying for the same. After the submission of the application is done, the PAN acknowledgement letter is signed and sealed by the Designated Partner of the LLP and couriered to the NSDL office. It then takes 10-20 working days to get the PAN card at your registered office address.
4) LLP Bank Account Opening
The Bank account for limited liability partnership compliance can be opened easily, as it is deliberated to be a corporate thing. Following are the documents of the LLP that must be submitted while opening a bank account for LLP:
All documents must be signed by a Designated Partner and must contain the seal of LLP.
5) Auditor Appointment
Unlike Annual compliance for PLC, there is no audit requirement LLP or a mandatory rule to appoint an auditor for your company. Unless your company’s turnover exceeds Rs 40 lakhs or the capital cost exceeds Rs 25 lakhs.
As discussed earlier, the LLPs in India have to file their Annual Return within 60 days after being incorporated. Unlike Companies, maintenance of the financial year is mandatory for the LLPs. Hence, the LLP annual return is paid prior to or on May 30th and the Statement of Account & Solvency is done by or on October 30th of every financial year. Special care must be taken to ensure that the mandatory compliance of an LLP Annual returns are filed on time. Failing which, one has to pay a penalty fine of Rs.100 per day without any ceiling.
Filing Annual Accounts or Statement of Accounts or P&L and Balance Sheet:
All types of LLPs are required to maintain their Books of Accounts in Double Entry System. Thereafter, the LLPs have to prepare a Statement of Solvency (Accounts) every year before the end of 31st March. For this, the LLP Form 8 must be filed by the Registrar of Companies on or before 30th October every year.
Form 8 or Annual Statements are valid to the LLPs registered until 30th September 2016. For the LLPs registered post 1st October 2016, the Annual Statements can be filed in 2018. The LLPs whose turnover exceeds more than Rs.40 lakhs or the capital profit grows Rs.25 lakhs are required to have an audit requirement LLP where a practising auditor is appointed.
The annual compliance for LLP is mandatory and a creation of the law. Under legal acts, there will be income tax returns, legal provisions, maintenance of the accounting, and so on. The day to day accounting is done on the double entry system.
The payment of taxes like sales tax, service tax, and TDS is required to be paid on monthly basis and the returns are supposed to be filed on half or quarterly basis.
Once the filing and return taxes are paid, the filing and accounting are meant to be done with the Registrar.
Some of the key compliances that an LLP must choose:
Above all, the mandatory compliance for an LLP is carried out with less hassles, compared to the private limited company that has board meetings and annual meetings twice or thrice in a year and under which, all the board members and designated partners are required to be present a show up with all the balance sheets and performance graphs to ensure their productivity level and get the next financial bill passed on. The mandatory compliance for LLP is carried out by the partners of the business and made sure that all the returns and filings are done on time and within the limits of the law.
If you are struggling with any compliance and law for your LLPs then it will be wiser to get in touch with someone professional who can guide you in terms of the process of filing, accounting, and tax return services. The better you and your liability partner get to know the legal updated policies the better you can run your business with a peace of mind.
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