Annual Compliance for llp company | How to apply 2020
A Limited Liability Partnership is a type of partnership in which partners’ liability is very limited. In limited liability, the term “limited’’ denotes that there is limited liability and partners are not entirely responsible for the company. In an LLP, one partner is also not liable for another partner's misconduct or negligence. This is the fundamental difference from that of an unlimited partnership.
In India, all LLP companies are required to file annual tax compliances. All LLPs registered with the Ministry of Corporate Affairs need to file Annual Returns and Statement of Accounts for every Financial Year. It is mandatory for a Limited Liability partnerships to file a return irrespective of whether it has done any business. It’s also compulsory to file a Statement of Account & Solvency within 30 days from the end of six months of the close of the financial year. LLPs in India must keep their financial year from April 1st to March 31st.
LLPs in India are required to file following compliances
- Filing of Annual Return – LLP Form-no. 11
- Filing Statement of Account & Solvency – LLP Form-no. 8
- Filing of Income-tax return
Benefits of filing annual compliances in LLP company
Increased credibility:
Filing annual compliances is mandatory for any business. The status of LLP annual filing is displayed at the Master Data of the LLP on the MCA portal and the same can be accessed by any person. Filing annual is very important for the credibility of the company.
To avoid legal penalties:
In the case of consecutive default in annual filing, the LLP can be declared as defunct or receive default status. Also, the partners can be declared as defaulters and may also be disqualified from their further appointment in LLP or company. Regular filing also saves the LLP from heavy additional fees and penalties.
Easy conversion and closure:
For conversion of the LLP into any other organization, annual filing is very essential. The regular compliance records ease the conversion task. The same applies in case of closure of LLP. Even if the LLP was non-operational, the Registrar may ask to fulfill annual compliance, with additional LLP filing fee, if applicable.
Build trust:
Whether it is a customer or vendor or supplier or the regulatory body, everybody trusts those companies who file compliances on time and are quite open about their financial details. Such companies have better credibility; and hence, find it easy to build trust among everybody.
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Documents required for filing LLP annual compliance
- Identity proof of the designated partners
- LLP agreement
- Bank account details
- Registration proof of company
- Balance sheet, along with financial statements audited by an independent auditor.
- And other important information regarding the company if required.