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OVERVIEW
Limited liability partnerships (LLPs) are required to meet fewer criteria for compliance on filing annual returns, in comparison to private limited companies. LLPs are required to provide information related to the statement of accounts, and returns, on an annual basis. Penalties, however, are huge for failure to comply. Entities that don’t provide the requisite information are fined heavily, with penalties that can go up to Rs. 5 lakhs.
LLP ANNUAL FILING
- List Best if you have NIL Business Transaction OR upto !cr
- Preparation of the Finance Statement by CA
- Form 11 & Form 8 Filing
- Income Tax Return of LLP
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Checklist Items for LLP Annual Filing Compliances
- Annual returns need to be filed with the Registrar of Companies.
- Annual returns to be filed as per the prescribed format of LLP Form 11.
- This is required to be filed within 60 days from the close of the financial year, or the 30th of May of each year.
- The LLP annual compliance has to be met by each and every registered LLP even if there is no business activity. In fact, it has to be met even if the LLP has been closed down and whether or not a business bank account exists.
Drafting and Filing LLP Agreement
The next crucial step in the LLP incorporation process involves carefully crafting the LLP Agreement to meet the partners’ specific requirements. This agreement serves as the foundational document of the LLP and outlines key aspects of the business.
Here are the essential details included in the LLP Agreement:
- LLP’s Name: The agreement specifies the chosen name of the LLP, ensuring it aligns with the approved name reserved during the earlier stage of the process.
- Partners and Designated Partners’ Details: The agreement includes the names and addresses of all partners and designated partners involved in the LLP.
- Business Objectives: The objectives and scope of the LLP’s business activities are clearly defined in the agreement.
- Place of Business: The physical location of the LLP’s registered office and any additional places of business are documented.
- Contribution and Interest on Contribution: The agreement outlines the capital contributions made by partners and the corresponding interest on those contributions.
- Profit Sharing Ratio: The distribution of profits among partners is stated, highlighting the agreed-upon profit-sharing ratio.
- Rights and Duties of Partners: The agreement delineates the rights and responsibilities of partners in various scenarios, such as admission, resignation, retirement, etc.
- Proposed Business: A detailed description of the proposed business activities and operations of the LLP is provided.
- LLP Governance Rules: The internal governance structure and decision-making processes within the LLP are outlined in the agreement.
Execution of the LLP Agreement
Once the LLP Agreement is meticulously drafted, it undergoes a thorough review and agreement among all partners. Once consensus is reached, the agreement moves to the execution stage, involving the following steps:
- Payment of Stamp Duty: The LLP Agreement attracts a stamp duty, which must be paid in accordance with the applicable state laws.
- Signing by Partners: All partners involved in the LLP must sign the agreement, indicating their acceptance and commitment to its terms.
- Attestation by Witnesses: The signed LLP Agreement is attested by witnesses, validating the authenticity of the signatures and the document.
Once all partners thoroughly review and agree upon the LLP Agreement, it will be executed by paying the necessary stamp duty. The amount of stamp duty required will be determined by the respective State Stamp Act of the location where the registered office of the LLP is situated. After the payment of stamp duty, the agreement will be formally executed with the signatures of the partners and attestation by witnesses.
Execution of the LLP Agreement
Once the LLP Agreement is meticulously drafted, it undergoes a thorough review and agreement among all partners. Once consensus is reached, the agreement moves to the execution stage, involving the following steps:
- Payment of Stamp Duty: The LLP Agreement attracts a stamp duty, which must be paid in accordance with the applicable state laws.
- Signing by Partners: All partners involved in the LLP must sign the agreement, indicating their acceptance and commitment to its terms.
- Attestation by Witnesses: The signed LLP Agreement is attested by witnesses, validating the authenticity of the signatures and the document.
Once all partners thoroughly review and agree upon the LLP Agreement, it will be executed by paying the necessary stamp duty. The amount of stamp duty required will be determined by the respective State Stamp Act of the location where the registered office of the LLP is situated. After the payment of stamp duty, the agreement will be formally executed with the signatures of the partners and attestation by witnesses.
LLP Agreement Format
LIMITED LIABILITY PARTNERSHIP AGREEMENT
Name of Partner 1 (the ‘First Partner’):
Address: [Address]
Capital Contribution: [Amount or Description]
Profit-Sharing Ratio: [Percentage]
Name of Partner 2 (the ‘Second Partner’):
Address: [Address]
Capital Contribution: [Amount or Description]
Profit-Sharing Ratio: [Percentage]
[Add more partner sections if there are additional partners]
1. NAME AND ADDRESS OF THE LLP:
The name of this Limited Liability Partnership shall be [LLP Name], and its registered office address shall be [Address].
2.NATURE OF BUSINESS:
The LLP shall engage in the business of [Describe the nature of the business activities].
3. DURATION OF THE LLP:
This LLP shall exist indefinitely unless dissolved by the mutual agreement of the partners or as otherwise provided by law.
4.CAPITAL CONTRIBUTIONS:
Each partner’s initial capital contribution and any additional contributions shall be as specified above. Capital contributions shall be made in cash or as otherwise agreed upon by the partners.
5. PROFIT AND LOSS SHARING:
Profits and losses of the LLP shall be allocated among the partners based on their profit-sharing ratios as specified above.
6. MANAGEMENT AND DECISION-MAKING:
The management of the LLP shall be vested in the partners. Major decisions shall require a unanimous vote of all partners, except as otherwise specified in this Agreement.
7. MEETINGS AND VOTING:
Regular meetings of the partners shall be held [Specify frequency]. Notice of meetings shall be provided [Specify notice period]. Voting shall be based on the profit-sharing ratios unless otherwise agreed.
8. WITHDRAWAL OR RESIGNATION:
A partner may withdraw or resign from the LLP by providing [Specify notice period] written notice to the other partners. The treatment of the withdrawing partner’s capital shall be determined as per the agreement.
9. ADMISSION OF NEW PARTNERS:
New partners may be admitted with the unanimous consent of the existing partners, subject to negotiation of their capital contribution and profit-sharing ratio
10. DISSOLUTION AND WINDING UP:
The LLP may be dissolved by a unanimous vote of the partners or as otherwise provided by law. Upon dissolution, the winding-up of affairs shall be conducted in accordance with applicable legal requirements.
11. GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with the laws of [Jurisdiction].
12. AMENDMENT OF THE AGREEMENT:
This Agreement may be amended by written agreement of all partners.IN WITNESS WHEREOF, the partners hereto have executed this Agreement as of the date first above written.
LLP Name Structure
The name of an LLP must comply with the following requirements:
- It must contain the words ‘Limited Liability Partnership’ or the abbreviation ‘LLP’.
- It must not be identical or deceptively similar to the name of any other existing company or LLP.
- It must not contain any words or expressions that are obscene, offensive, or misleading.
Important Forms in LLP Registration
| Description | e-Form with Instruction kit | e-Form |
|---|---|---|
| Application for reservation or change of name | Form 1 | Form 1 |
| Incorporation document and subscriber’s statement | Form 2 | Form 2 |
| Details in respect of designated partners and partners of Limited Liability Partnership | Form 2A | Form 2A |
| Information with regard to limited liability partnership agreement and changes, if any, made therein | Form 3 | Form 3 |
| Notice of appointment, cessation, change in name/address/designation of a designated partner or partner, and consent to become a partner/designated partner | Form 4 | Form 4 |
| Notice for change of name | Form 5 | FOrm 5 |
| Annual Return of Limited Liability Partnership (LLP) | Form 11 | FOrm 11 |
| Notice for change of place of registered office | Form 17 | Form 17 |
| Application and Statement for conversion of a private company/unlisted public company into limited liability partnership (LLP) | Form 18 | Form 18 |
| Application for direction to Limited Liability Partnership (LLP) to change its name to the Registrar | Form 23 | Form 23 |
| Application for reservation/renewal of name by a Foreign Limited Liability Partnership (FLLP) or Foreign Company | Form 25 | Form 25 |
| Return of alteration in the incorporation document or other instrument constituting or defining the constitution; or the registered or principal office; or the partner or designated partner of limited liability partnership incorporated or registered outside India | Form 28 | Form 28 |
| Application for compounding of an offence under the Act | Form 31 | Form 31 |
| Form for filing addendum for rectification of defects or incompleteness | Form 32 | Form 32 |
Highlights
- The agreement must be submitted to the Ministry of Corporate Affairs (MCA) within 30 days from the date of incorporation. Failure to do so will result in a penalty of Rs. 100 per day until the actual filing date.
- The filing is done using LLP form-3, which remains the same as in the previous process. The verification and approval are now processed by the concerned State Registrar of Companies (ROC) instead of the Central Registration Centre (CRC).
- The name allotted under LLP-RUN will be reserved for a duration of 90 days. If the LLP registration application (FiLLiP) is not filed within this period, the name reservation will expire and can be reserved again through a new application.
- FiLLiP allows for the allocation of only 2 DPIN/DIN (Designated Partner Identification Number). If there are more than 2 designated partners, the additional partners will need to obtain DPIN/DIN by filing DIR-3 after the incorporation process. Subsequently, the LLP can add new designated partners or change the designation of partners as required.
- The certificate of incorporation serves as conclusive evidence that the limited liability partnership is incorporated under the specified name.
- The Registrar of Companies (ROC) assigns a unique Limited Liability Partnership Identification Number (LLPIN) to every registered LLP.
LLP need to file a tax return?
Yes, LLPs are required to file their annual income tax return irrespective of profit or loss. The LLP’s income tax return (ITR) must be filed electronically using the prescribed forms and within the due dates specified by the tax authorities.
We can help you to filling you IT Return