What to do post LLP Formation
A Limited Liability Partnership or LLP is a partnership arrangement between two or more than two partners. The LLP is registered under The Limited Liability Partnership Act, 2008. LLP operates as a body corporate which is governed by Limited Liability Partnership Act, 2008 (“Act”) and LLP Rules 2009 (“Rules”). LLP holds the benefit of limited liability. The personal assets of the partners of an LLP cannot be used to pay off the liabilities of the LLP.
While forming and LLP, an agreement is entered between the partners which lays down the various aspects of the functioning of the LLP. This can include areas in which LLP will work, rights of partners, responsibilities of the partners, etc.
All LLP’s are required to comply with certain rules and laws laid down in LLP Act and rules, and submit details and information with the Registrar on an annual basis. We have summarized these relevant laws below:
What Books of Account should be maintained by an LLP?
As per rule 24(2) of the Rules, the LLP is required to maintain the following documents for its business and file with the registrar annually:
For how many years Limited Liability Partnership should preserve its Record?
As per rule 24(3) of the Rules, Limited liability partnership is required to keep books of account for 8 years from the date from the end of the respective Financial Year.
Is Audit of LLP mandatory?
One of the major advantages of an LLP as compared to a company is that it is not mandatory to get the accounts audited unless the turnover /capital contribution criteria are met. Every LLP has to maintain the annual accounts showing the true and fair view of the state of affairs of the LLP. As per rule 24(8) of the Rules, every LLP has to get its accounts audited by a Chartered Accountant in the following cases:-
How Auditors can be appointed in LLP?
The designated partners may appoint an auditor or auditors—
An auditor shall hold office as per term of their appointment to hold the office till:
What E forms are required to be Filed by LLP on Annual basis?
There are two E forms which are required to be filed by any LLP on an annual basis.
Below given is brief summary of provisions related to both forms:-
Form 8: Statement of Account and Solvency
Form 8 is also known as Statement of Account & Solvency. In Form 8, According to the rule 24(4) the LLP must provide details of financial transactions undertaken during the financial year and position at the end of financial year. In addition to the financial position, the LLP must also declare:-
Due date- within 30 days from the end of 6 months of end of the respective Financial Year i.e. on or before 30th October every year.
Form 11 LLP: Annual Return
Turnover up to Rs. 5 crore: during the corresponding financial year
Contribution up to Rs. 50 Lakh shall be accompanied with a certificate from a designated partner.
In case total obligation of contribution of partners of the LLP exceeds Rs. 50 lakhs or turnover of LLP exceeds Rs. 5 crores, then LLP Form 11 needs to be certified by a Company Secretary in whole time practice.
Due date- within 60 days of closer of financial year (for f.y-2020-2021 due date is 30-5-2021)
What are the consequences of non filing?
From Rs.10,000 to Rs.1,00,000 penalty