To start a venture as LLP, for a startup, the legal compliances and their reporting requirement need not end just at the incorporation of the LLP; in fact it begins from there.
When it comes to post incorporation compliances, LLP is known for its least compliance burden which becomes the major cause for recent surge in incorporations of LLP.
This article covers the compliances to be adhered by a LLP under Registrar of Companies, Ministry of Corporate Affairs, mentioned under LLP Act, 2008 and Income Tax Act, 1961 including Tax audit provisions.
Following are the list of post incorporation compliances for LLP:
LLP Agreement may be a written contract between the partners of the LLP. It establishes the roles, responsibilities, rights, duties and powers of all the partners towards each other as well towards the LLP. It creates the inspiration for the graceful running of LLP.
Immediately after incorporation of the LLP, the partners of a LLP are required to execute and file the LLP agreement with MCA in Form 3 within 30 days of the incorporation of LLP. LLP Agreement is required to be stamped as per stamp duty payable under respective state where the LLP is registered.
Failure to file LLP Agreement post LLP incorporation attracts a heavy penalty of Rs.100 per day of default.
Application for Permanent Account Number (PAN) & Tax Deduction and Collection Account Number (TAN) :
Every LLP has to obtain a PAN & TAN from Income Tax Department, Government of India. PAN is an identification number for every tax payer under Income Tax Act. Certain category of payments requires tax write-off at Source (TDS) and therefore the tax so deducted must be remitted to the government.
LLP stationery like letterhead, official documents, invoice etc., with the LLP name and registered office of the LLP has to be prepared.
Open Bank Account in LLP Name:
Post incorporation of LLP, it is important to open a Current Account in the name of the LLP with any Bank. All the transactions within the name of the LLP should be transacted through the LLP checking account only. For bank account opening, LLP need to submit following documents to bank:
- LLP PAN card
- Certificate of Incorporation of the LLP
- LLP Agreement
- Resolution for bank account opening
- List of authorized person/s with the specimen signatures to work the account
- Partners KYC details
- Cheque for initial deposit of amount to Open Bank Account (This deposit can be considered as the capital infusion by the partners)
Also, the documents and initial deposit may vary from bank to Bank. There are banks offering ‘Zero’ balance Accounts also subject to conditions.
Infusion of Initial Capital into bank account:
Once the current account of LLP has been opened, the initial partners of LLP has to bring, within stipulated period, the amount of capital contribution in cash or kind as stated in the subscription document and LLP Agreement at the time of LLP incorporation.
Appointment of Auditors:
Every LLP whose capital contribution exceeds Rs.25 lakhs or annual turnover exceeds Rs.40 lakhs has to get the books of accounts audited by a Chartered Accountant in Practice. For other LLP’s audit is not a mandatory requirement.
Books of accounts:
The books of accounts should reflect a true and fair view of the state of the affairs of the LLP, including its branch office or offices.
For Annual LLP Compliances and Income Tax filing, every LLP needs to maintain proper books of accounts relating to its affairs at its registered office or such other place in India as decided by the partners from to time on cash / accrual basis and according to double entry system of accounting.
LLP can maintain books of account manually or in electronic mode.
ROC Filing of annual return:
Every LLP is required to file the following forms with the Registrar every year:
|Sr. No||Particulars||Forms||Due date||Additional Fees|
|1||Annual Return||Form 11||within 60 days from the end of a financial year|
Rs.100 per day of default
|2||Statement of Account & Solvency||Form 8|
within 30 days from the end of 6 months from the end of a financial year(30th October)
|Rs.100 per day of default|
Financial Year of each LLP must be closed on 31st March. However, period of monetary year depends on the month of its incorporation: If an LLP is incorporated on or after 1st April 2020 till 30th September 2020 then the LLP can file returns for the financial year ended 31st March 2021.
If an LLP is incorporated on or after 1st of October 2020 then the LLP can file returns for the financial year ended 31st March 2021 or 31st March 2022. It means LLP can file its first financial return for a period of 18 months.
Holding of Compliance Meetings:
An LLP is required to conduct the primary General Meeting within 30 days of incorporation of the LLP. In addition to this, at least one General Meeting and two Executive Committee Meetings are required to be held once in a financial year.
Filing of Income Tax Returns:
Every LLP is compulsorily required to file Income Tax Returns every year. Income Tax Return Filing is mandatory even in case of no business activity.
Income Tax Return for a particular assessment year cannot be filed after the end of the assessment year. It is advisable to file Income Tax Returns within the due date to carry forward losses and to avoid late filing fees and penalties.
LLP can file its return of income in ITR 5. It is mandatory for LLP to file return of income electronically under digital signature if its accounts are required to be audited under section 44AB.
|Sr. No.||Particulars of Income Tax Return||Due Date
|1.||In case Audit is not required under section 44AB.||31st July of every year|
|2.||In Case Audit is required under section 44AB.||30th September of every year
|3.||LLPs that entered into a world transaction with associated enterprises or undertook certain Specified Domestic Transactions are required to file Form 3CEB.||30th November of every year
Goods and Services Tax (GST) Registration:
Every LLP whose annual turnover exceeds Rs. 40 lakhs (service providers 20 lakhs)has to mandatorily register under GST.
However, where LLP finds that post registration, GST Registration is important for its business then it can voluntarily opt for GST registration. Most of the cases when LLP is dealing with B2B business / MNC companies, vendor demands for GST Registered firm. In such case it becomes important to apply for GST Registration.