The Benefits Of Filing Annual Compliance For LLP | Ebizfiling

   Introduction 

 

LLP stands for Limited Liability Partnership. It is an alternative corporate structure where the members benefit from the feature of limited liability (which means that the members are liable for the shares they own) and the feature of the flexibility of partnership (which means that the members are free to decide the duties and responsibility of their own through an LLP agreement). When you register your business as LLP there is certain compulsory annual compliance for LLP that is required to be filed. In this blog, we will learn about the various LLP annual compliance and the benefit of filing annual compliance for LLP.

 



 

 What is an LLP annual compliance? 

 

Every Limited Liability Partnership must file LLP annual compliance each financial year to maintain an active status on the MCA portal. Regardless of the fact the LLP is in operation or not. LLP annual compliance is compliance which an LLP files to MCA and Income Tax Authorities. There are two different forms to be submitted to the MCA and one Income Tax Return form submitted to the Income Tax authorities.

 

 Various annual compliance for LLP 

 

Below are the 3 e-forms filed by the LLP every year with MCA and Income Tax Department:

 

1. Statement of insolvency and accounts

 

Fill the Form 8 for filing the accounts and insolvency statement of an LLP as instructed by the MCA. Along with the form attach details of the assets and liabilities of the LLP, a statement of revenue and expenditure, and a declaration of the financial state of the LLP by its authorized partners. The form 8 should be filed by the partners and it should be certified by the CS/ CA. It is an annual compliance for LLP which should be filed on 30th October of every financial year. It should be noted that the CS/ CA should audit the books in case the annual turnover of LLP is more than INR 40 lakh or the contribution is more than INR 20 lakh.

 

2. Filing of annual return

 

Fill the Form 11 for filing the annual return of the LLP as instructed by MCA. The annual return should be filed with the Registrar of Companies. Along with Form 11 attach the DSC of the designated partners. The form 11 should be filed by the partners and certified by the CS/ CA only when the annual turnover is more than INR 5 Cr. or the contribution is more than INR 50 lakh. It is an LLP annual compliance which should be filed on 30th May in every financial year.

 

3. Filing of income tax return

 

Since LLP is a separate legal, partners have to file LLP annual tax return. ITR form 5 is the form for filing the income tax returns of LLP. The purpose of filing ITR 5 is to file the annual turnover of the LLP. According to the section 139(1) of the Income Tax Act, 1961 each LLP registered in India needs to file an income tax return. The due date for filing ITR 5 is 31st July in case of no audit and if the audit is required then the due date is 30th September. The audit happens when the turnover of the LLP is more than INR 40 lakhs or the capital exceeds INR 25 lakhs, the accounts of the LLP should be audited by Chartered Accounted.

 

 Benefits of filing annual compliance for LLP 

 

Listed below are some benefits of filing annual compliance for LLP every year:

 

A. Simpler conversion

 

Filing annual compliance every year can help the LLP to convert to any other type of company easily and smoothly. The Registrar may ask for the records of LLP compliance to check if it is filed regularly at the time to conversion.

 

B. Active status

 

If the LLP continuously fails to submit annual return and statements of insolvency & accounts, then it can be declared as inactive or a default status will be given. So to maintain the status active, it is important to file each LLP annual compliance in every financial year.  

 

C. Avoid penalties

 

If an LLP files compliance regularly then it can avoid the fines or penalties associated with non-filing of compliance or late filing of compliance. So filing annual compliance for LLP is must.

 

D. Financial worth

 

The forms filed by the LLP are accessible to other companies. As a result, the interested party may consider the financial worthwhile entering into contracts or executing big undertakings. So filing the forms along with the necessary financials can give an idea to the interested person.

 

 Conclusion 

 

We will conclude by saying that it is beneficial for the Limited Liability Partnership to file compliance for LLP every year in many ways. Filing the annual compliance of an LLP is easier than any type of company because LLP has less compliance compared to a company. There is not one single benefit but many benefits of filing annual compliance of LLP such as conversion, avoid penalties, active status, etc.

 

 

 

 

 

 

 

 

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