Annual Compliances of Limited Liability Partnership
Limited liability partnerships (LLPs) are required to meet fewer criteria for compliance on filing annual returns, in comparison to private limited companies.
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Annual Compliances of Limited Liability Partnership
Limited liability partnerships (LLPs) are required to meet 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.
Benefits of Filing 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.
Partnership Firm Tax Return Filing
Partnership firms are required to file income tax return in form ITR 5. Like all other income tax forms, ITR 5 is an attachment less form and there is no requirement for submitting any documents or statements along with a partnership firm tax return. However, the taxpayer must save all records pertaining to the business and produce the same before tax authorities when requested.
Procedure for Filing Partnership Firm Tax Return
Income tax return of a partnership firm can be filed online through the income tax website or manually. If the income tax return is filed online, then a class 2 digital signature will be required for the Partner of the firm. Also, online income tax return filing is mandatory for partnership firms required to obtain an audit.
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 up to 30th October. 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 corporate 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.