Escape hefty penalties with timely annual LLP compliance filing
A Limited Liability Partnership (LLP) holds a separate legal status and must maintain its active status through regular filings with the Ministry of Corporate Affairs (MCA). Annual compliance filing is mandatory for all LLPs, whether or not they have business operations during the year.
The annual compliance for an LLP involves filing two separate forms:
Form 11 (Annual Return), which reports on the activities of the LLP.
Form 8 (Statement of Accounts and Solvency), which outlines the financial data and solvency position of the LLP.
These forms are submitted to report the activities and financial data for the relevant financial year in the upcoming year. Failure to meet the LLP Annual Compliance requirements results in an additional fee of ₹100 per day of delay until the filing is completed. This penalty structure, along with the legal obligation, creates a strong incentive for the Designated Partners to ensure compliance is met in a timely manner.
Legal compliance is a fundamental requirement for any business. The status of an LLP’s annual filing is publicly available on the Master Data section of the MCA portal, accessible to anyone. This transparency makes it easy for stakeholders, including potential investors or financial institutions, to verify the company’s compliance history. For processes like loan approvals or similar transactions, compliance plays a crucial role in assessing the credibility and trustworthiness of the organization. Companies with consistent and timely compliance are more likely to be viewed favorably and trusted by third parties.
The forms filed by the LLP are publicly accessible, allowing any company or interested party to review them. Therefore, when entering into contracts or engaging in major projects, the concerned party can inspect the LLP’s financial records to assess its financial worth and capacity. The LLP’s annual filings provide a transparent record of its financial standing, which helps potential partners, investors, or clients evaluate its credibility and stability before proceeding with any business dealings.
In the case of consecutive defaults in annual filing, the LLP may be declared defunct or assigned a default status. Additionally, the partners can be labeled as defaulters and may face disqualification from holding further appointments in the LLP or any other company. To avoid this, it is crucial for the LLP to file the required returns on time to maintain its active status. Regular filing not only ensures compliance but also protects the LLP from incurring heavy additional fees and penalties for delayed filings.
For the conversion of an LLP into another type of organization, regular annual filing is essential. Maintaining up-to-date compliance records simplifies the conversion process and ensures a smoother transition. The same requirement applies when closing an LLP. Even if the LLP has been non-operational, the Registrar of Companies may still require the company to fulfill its annual filing obligations, and failure to do so could lead to the imposition of additional filing fees. Ensuring compliance at every stage prevents delays and complications during conversion or closure.
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LLP Annual Filing is necessary for every LLP since its incorporation. From the closure of its first financial year, the LLP must file both the forms within the prescribed time limit.
The annual compliance is mandatory for every LLP, irrespective of the number of transaction, turnover or commercial activity undertaken.
In case of delay in filing, the LLP is charged with additional Government fee of ₹ 100 for each day of delay. Also, there is no ceiling limit to an additional fee. For continuous failure to annual LLP compliance, the RoC can remove the name of LLP from its register. Also apart from additional fees, the penalty may also be levied to LLP and its partners.
The audited books of accounts are necessary for the LLP falling under any of the below-mentioned criteria:
1) If turnover of the LLP exceeds ₹ 40 Lakh; or
2) Total contribution of Partners exceeds ₹ 25 Lakh.
If LLP does not fall under any of the above criteria, statements with the signature of partners are sufficient.
Call us at: 9414883452 or Email us : contact@submitreturn.com
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