What are the Compliances Applicable on a Limited Liability Partnership Firm (LLP)?
A LIMITED LIABILITY PARTNERSHIP (LLP) is an alternative business form that incorporates the features of both partnership and company, like the company it provides the benefits of limited liability, and like a partnership, it has the flexibility.
THE ESSENTIAL REQUIREMENT FOR SETTING LLP IS ‘CARRYING ON A LAWFUL BUSINESS WITH A VIEW TO PROFIT.
- LLP is an organized form and operates on the basis of an agreement.
- LLP imparts flexibility without imposing any detailed legal and procedural requirements.
- LLP enables professional /technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner.
To form an LLP a MINIMUM OF 2 PARTNERS are required. there is no limit to the maximum numbers of partners required to form an LLP. Any body corporate can also become a partner in LLP.
- Appointment of at least 2 “DESIGNATED PARTNERS” , who shall be individuals and at least one of the designated partners shall be a RESIDENT OF INDIA, is mandatory for all LLPs. Designated partners are accountable for regulatory and legal compliances, besides their liability as ‘PARTNER, PER -SE’. Every designated partner is required to obtain a “DESIGNATED PARTNER’S IDENTIFICATION NUMBER” or DIN.
- Every LLP should get registered with ROC (Registrar of companies). AN INCORPORATION DOCUMENT ,CONTENTS OF LLP AGREEMENTS , address of registered office are required to be filed with registrar.
- ANY change made in contents of LLP agreement should be filed in FORM 3 and details of partners /designated partners should be filed in FORM 4 in accordance with LLP rules ,2009.
- Every LLP is required to maintain annual accounts reflecting true & fair view of its state of affairs. A “STATEMENT OF ACCOUNTS AND SOLVENCY ” in FORM 8 shall be filed by every LLP with the registrar every year . this form should be attested by the signatures of designated partners and should also be certified by a practicing expert or a practicing company secretary or a practicing cost accountant .The due date to file form 8 is October,30 , for every financial year.
- The accounts of every LLP shall be audited in accordance with RULE 24 of LLP, rules ,2009. LLP whose turnover does not exceeds 40 lakh rupees and whose contribution does not exceeds 25 lakh rupees in any financial year is not mandatory to get its account audited unless otherwise, partners decides to get its accounts audited.
- Every LLP is required to file ANNUAL RETURNS in FORM 11 with ROC within 60 days of the closure of financial year i.e. 30th MAY, Every year. This form contains the summary of management affairs of llp , like Numbers of partners along with their names.
For any defaults/non-compliance on procedural matters , a fee of RS.100 for every day for which the default continues is payable. If LLP files relevant documents after its due date with additional fees upto 300 days , no action for prosecution will be undertaken , after that , the LLP is required to pay normal filing fee , additional fee and shall also be liable to be prosecuted.
IN case of false statements, imprisonment for a term that may extend to 2 years and fine of minimum one lakh rupees and maximum five lakh rupees is given in the law.
Need to register your own LLP? Contact Us Here