It is a requirement of limited liability partnerships (LLPs) to meet fewer compliance requirements on filing annual returns than it is for private limited companies to do so. LLPs are required to provide information related to the statements of accounts, as well as returns, on an annual basis. A failure to comply can result in very heavy penalties. Entities that don’t provide the required information can face penalties of up to Rs. 5 lakhs, and penalties can go up to Rs. 5 lakhs in the case of non-compliance.
LLPs may benefit from annual compliance filing
- In terms of loan approvals or other similar requirements, annual compliance provides the organization with greater credibility.
- LLP’s annually file financial disclosures with the SEC, which is useful for other businesses to have an idea about the financial standing of the company. This may attract investors who are interested in investing in the organization.
- LLPs stay active when they file regular reports, and do not become defunct when they fail to file. LLPs are also subject to penalties (additional fees) when they fail to file regular reports.
- Limited Liability Partnerships can be converted into other types of companies more easily with regular annual filings, as well as dissolved more quickly if they are dissolved.
How do I file an annual compliance checklist?
- The Registrar of Companies must receive annual returns.
- In accordance with LLP Form 11, annual returns must be filed.
- In every year, the financial year closes on the 30th of May, and this report must be filed within 60 days.
- It is mandatory for every LLP to meet the LLP Annual Filing compliance requirements regardless of whether there is any business activity. In fact, it is mandatory, regardless of whether there is a business bank account.
How Should Annual Compliance Be Filled?
If you’re in business, all you need to do is to stay disciplined and vigilant in order to meet your annual compliance requirements, but if you’re callous, you will face hefty fines and penalties, so you’d better stay on top of things. Additionally, LLPs that meet the annual compliance requirements are often given loans or are readily funded by investors because these businesses are in compliance with the requirements of the Registrar of Companies (RoC).
Registrar of Companies (ROC) regular updates
In the event that there are any changes made by the ROC, throughout the year, you will be kept up to date with all the changes made by them. With an on-call company secretary, you can ensure that your business is properly run to comply with the laws in force.
What documents must be filed for annual compliance?
Form 8 lip
There are two parts to a Form 8; the first part is for the company secretary to certify the form, the second part is for the chartered accountant to certify the form. It must be filed within 30 days after the end of the financial year. Two designated partners can sign the form digitally.
- Solvency statement – Part A
- PART B – Expenditures and income.
It will be penalized by Rs 100 per day for not filing the Form 8 within the deadline.
Form 11 lip
It contains information about the total number of designated partners, the names and contact details of the partners, the names and addresses of the body corporations that are partners, the contributions received by the partners, as well as a summary of the partnership. LLPs are required to submit a Form 11 within 60 days after the end of the financial year, along with the prescribed fee. Therefore, they will need to submit their Form 11 by 30th May every year.
In order to avoid penalties, LLPs are required to file their annual returns by the deadline to avoid closing or winding up their companies.