Limited Liability Partnerships (LLP) is a type of business entity sharing features of a partnership firm and a company. LLPs are regulated by the Registrar of Companies, the Ministry of Corporate Affairs. An absolute legal entity separate from its partners and perpetual succession, some major benefits and powers enjoyed by LLPs are:
LLPs must maintain compliance and file certain statutory filing with the government (annually).
All LLPs are required to maintain proper books of account relating to its affairs each year on a cash or accrual basis. A double entry system of accounting must be maintained for the book of accounts at the registered office. The accounts of LLPs with a turnover of more than Rs. 40 lakhs or with a capital over Rs. 25 lakhs, must be audited by a Chartered Accountant.
Any LLP that does not comply with the provision of the Act is punishable with a hefty fine between Rs. 25,000 – Rs. 50,000. The designated partners can be punished with a Rs. 10,000 – Rs. 1,00,000 non-compliance penalty.
LLP is a partnership with limited liability. Every ministry which is registered with the Ministry of Corporate Affairs requires filing the Annual Returns and Statements of Accounts every year and that is annual filing for LLP.
There are mainly three mandatory compliances associated with every LLP at any financial year:
As per the audit under LLP Act, only those LLPs whose annual turnover exceeds Rs. 40 lakhs or if their contribution exceeds Rs. 25 lakhs are required to get their accounts audited.
Annual Returns is required to be filed in Form 11 to the Registrar within 60 days from the Financial Year closure, i.e., before 30th May every year by every LLP. Form 8 is to be prepared and closed until 31st March, every year.