Know About The Annual Compliance Filings For LLPs
Risk Is The Crux Of Adventurism
Risk is the essence of active & dynamic adventure. It is only by taking risks that we can make giant strides and make massive gains. However, risk is not the cup of tea for everyone, in everything. There are various areas of human activities, wherein we need to take more calculated risks. The area of business which involves a lot many risks is forming an alliance or entering a partnership with someone else. But there are certain features which safeguard the entrepreneurs against the possibility of larger risks.
Limited Risks And The Concept Of Limited Liability Partnerships (LLPs)
LLPs are special types of partnerships, wherein we are structured to create business and entrepreneurship without the vulnerability of incurring any massive risks. This is a very good feature of business, which encourages people to take more risks as they do not get embedded in any compulsive inordinate risk.
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LLPs allow for a partnership structure where each partner’s liabilities are limited to the amount they put into the business.
Having business partners means spreading the risk, leveraging individual skills and expertise, and establishing a division of labor.
Limited liability means that if the partnership fails, then creditors cannot go after a partner’s personal assets or income.
LLPs are common in professional business like law firms, accounting firms, and wealth managers.
What Are The Annual Filings For LLPs?
LLPs need fewer criteria for compliance on filing annual returns, in comparison to private limited companies. LLPs are required to provide information related to the statement of accounts, and returns, on an annual basis. Penalties, however, are huge for failure to comply. Entities that don't provide the requisite information are fined heavily, with penalties that can go up to Rs. 5 lakhs.
Know About The Filing Of Annual Compliances For LLPs
Higher Credibility:Annual compliance provides for higher credibility to the organization for loan approvals or any other similar requirements.
Record of Financial Worth:Annual compliance filings by LLP’s provide records to other companies regarding their financial worth, which may result in new and interested investors.
Stays Active and No Penalties:With regular filings, LLPs are not declared as defunct, and stays active. Also, annual compliance filings are mandatory and hence involve penalties (additional fees) to LLPs, when they default on filings.
Conversion or Closure:Regular annual compliance filings facilitate easier conversion of Limited Liability Partnerships into other types of companies, as well as quicker resolutions in case of dissolution of partnerships.
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Know About The Checklist items for Filing of Annual Compliance
Annual returns need to be filed with the Registrar of Companies.
Annual returns to be filed as per the prescribed format of LLP Form 11.
This is required to be filed within 60 days from the close of the financial year, or the 30th of May of each year.
The LLP annual compliance has to be met by each and every registered LLP even if there is no business activity. In fact, it has to be met even if the LLP has been closed down and whether or not a business bank account exists.
The Important Requirements of Filing Annual Compliance
Maintain Discipline:
For businesses to meet their annual compliance requirements, all it requires is for them to remain disciplined and vigilant. However, being callous can result in hefty fines and penalties. No to mention, LLPs that meet annual compliance requirements are often granted loans quicker or readily funded by investors, as these businesses are compliant with the requirements of the Registrar of Companies (RoC).
Regular Updates From The RoC (Registrar Of Companies)
With an on-call company secretary throughout the year, you can ensure that your business is run in accordance with the laws in force. Our team would keep you up-to-date on all the changes made by the RoC, throughout the year.
What are the Documents Required Filing of Annual Compliance?
Form 8
You must file the Form 8 inside 30 days from the completion of 6 months after a financial year ends. Two designated partners can sign this form digitally. Also, a company secretary/chartered accountant/cost accountant must certify the same. There are 2 parts in a Form 8 -
Part A - The solvency statement
Part B - Statement of expenditure & income, statement of accounts.
For not filing the Form 8 on time, a penalty of Rs 100 per day will be imposed.
Form 11
This form contains details such as the total number of designated partners, details of partners along with details of body corporates as partners, contributions received by the partners and summary of all partners. All LLPs must file the Form 11 within 60 days after the end of the financial year, along with the fee prescribed. Therefore, the LLPs should file their Form 11 by 30th May every year.
An LLP will not be allowed to close or wind up till it files all its annual returns. Therefore, all LLPs must file their annual returns on time, to avoid penalties.
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Conclusion
Thus, we see the benefits and required conditions for the specialised features of partnership known as LLPs.
