Features & Benefits of LLP

• The liability of the partners is limited to his stake in the capital except in the case of fraud and negligence.

• In an LLP, one partner is not answerable or liable for another partner’s misconduct or negligence.

• The partners of an LLP have the right to manage the business directly.

• An LLP provides limited liability protection for the owners.

• If the number of Partners reduces less than 2, the sole partner can still find a new Partner to fill the position.

• Post incorporation, an LLP can have limitless partners.

• If there is only one partner in an LLP, there is time to find a new one, without dissolution of the LLP.

• It is a separate legal entity.

• LLPs have assets and liabilities that are separate from that of the promoters.

• An LLP can raise funds from Partners, Banks and NBFCs

Legal Compliances By LLP

• 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 LLP to file a return irrespective of whether it has done any business.

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Books of Account to be preserved for a specified period

• The Books of Account of an LLP are required to be preserved for a period of 8 years from the date on which the BOA is made.

• The Books of Account shall be maintained by an LLP which relates to its affairs for each year of its existence. It can be on a cash basis or an accrual basis. The books of account shall be kept at its registered office.

• All LLPs are required to maintain their Books of Accounts in Double Entry System. They also need to prepare a Statement of Solvency (Accounts) every year ending on 31st March.

Disclosures

• In the account about the contribution made by each partner-As per Section 32 of the LLP Act read with sub-rule (1) of Rule 23; every LLP shall disclose in their account the contribution of each of the partner along with the nature of the contribution.

• Another very important LLP compliance is, On behalf of the Limited Liability Partnership, the designated partners are required to sign the Statement of Account and Solvency of an LLP.

Statement of Account and Solvency Form 8

• Form 8 consist of the statement of Account and Solvency. You should file Form 8 along with the fee, within 30 days from the end of six months of the financial year. Year ending for LLPs is 31st March of each year. Two designated partners must sign the form digitally. Further, it must be certified by a chartered accountant, auditor or the accountant of the company. Form 8 consists of information related to the statement of assets of the LLP and liabilities and statement of income and expenditure of the LLP.

• There are two types in Form 8. They are:

• Part A – Statement of Solvency

• Part B – Statement of Accounts, Statement of Income & Expenditure

Annual Return Form 11

• Form 11 consist of annual return. The form should contain the complete details of all the partners, their contributions towards the company, etc. You should file Form 8 along with the fee, within 60 days of the financial year. Year ending for LLPs is 31st March of each year. Therefore, LLPs have to file the LLP Form 11 on or before 30th May every year.

Income Tax Return

• Every LLP Company Must be Filed Income Tax Return Form ITR-5 Irrespective of Turnover and Filing of income Tax due date is 31st july after completion of every FY

• When Audit is Required in Income Tax then due date of income tax return is 30th sep after completion of FY.

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Audit Under Income Tax Act

• Every LLP whose turnover exceeds INR 1 Cr. in case of a business or INR 50 Lakh in case of a profession, is required to get its books of accounts tax audited under section 44AB of the Income-tax Act. Such audit will have to be completed and filed by 30th September.

• Limited Liability Partnerships (LLPs) which are required to file Form 3CEB (LLPs which have entered into international transactions) can do their tax filing by 30th November.

• The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2021-22 (FY 2020-21) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments

Audit Under LLP Act

• LLP whose turnover is more than Rs.40 lakhs or whose capital is more than Rs.25 Lakhs have to get the books of account audited by a Chartered Accountant.

Certificate from Company Secretary

• In case of LLPs with turnover more than five crore rupees in a financial year or contribution more than fifty lakh rupees, the annual return filed under form 11 needs to be certified by a Company Secretary in Practice.