An LLP (limited liability partnership) in an enlisted body. It is a partnership company in which all partners or some of them have limited liabilities. One positive point of this LLP is that one person will not be liable or accountable for the negligence or misconduct of another partner. This is controlled by the LLP Act 2008.
Two or more person has joined their hand together to carry a legal business with a common goal to generate profit. LLP is considered as an independent business format, and all partners are working for the never-ending progress of their organization.
Key highlights of LLPs
- LLPs required to follow legal agreements on their name.
- LLPs can purchase or hold all its substantial and portable assets in its name because LLP has a separate legal entity. Also, it is liable for all its assets, with its partners limited to only the amount of contribution.
- All profit distribution and other activities are performed according to the agreement made between LLP members.
- LLP has a right of appointing their company as the LLP member.
- LLP can also employ the persons as its employees.
- LLP is quite famous in the market because it helps to create goodwill.
Along with all these key highlights, an LLP needs to maintain all legal rules. Also, LLP needs to maintain online consistency of its documents for auditing, which can help it to be compliant with LLP law.
Compliances belong to LLP
LLPs are enlisted under the ministry of corporate affairs (MCA). It follows all these online compliances which are mandatory to be compliant under LLP law.
Form-11 of LLP- Online filling Annual return
According to form 11 LLPs prescribed format, an LLP need to file the annual returns. It is a mandatory process for all LLP to make it inside 60 days of the financial year. It is the LLP partner’s information of a change or modification in the management. That need to be complete before or on May 30th every year.
Form-8 of LLP- Statement of account and solvency
LLP need to file form 8 to the registrar of the company inside 30 days of completion of every half-year of that financial year with charging some fees. This form is divided into parts; its first part contains an online statement of solvency, and its second part contains an online statement of accounts, expenditure & income. This form must sign by two of its partners and need to certified by the professional bodies. This form should be filed on or before October 30th every year.
Income tax return filing
LLP required to file income tax regularly every year.
Penalties applicable for non-compliance of LLP
- If LLPs are not documenting form 11 or form 8 every year, then they will be penalized by 100 rupees every day. It may also continue up to filling to the registrar.
- If both the online structures have not filled by LLP yearly, then they both responsible partner will get punishment of 10 thousand to 1 Lakh.
- If the business visionaries are not obeying the LLP laws or regulations properly, then Registrar Company will give notification to LLP.
Business operations require time and effort for sustainable growth. It is applicable for all firms irrespective of whether it is an LLP, private limited, sole proprietorship, etc. It is essential to file all forms within time and also important to follow all LLP compliances regulations. In case of poor maintenance of these laws, heavy penalties can be imposed.