Post LLP formation Compliance: Everything to know!
One of the most popular business structures today is the Limited Liability Partnerships. The reason for this is the hybrid nature, providing the benefits of both, a private company and a partnership firm. In an LLP, the partners enjoy limited liability along with the option of raising funds by adding partners to the company. The process of LLP formation takes place online on the Ministry of Corporate Affairs Portal. Here, you will have to furnish all LLP information in the prescribed format of the MCA. Then, the MCA issues a notice of approval with the registration certificate of LLP. However, the journey doesn’t end there. For all limited liability partnerships in India, there are certain mandatory post-formation compliances. Through this blog post, we provide a comprehensive guide on post-registration compliances for Indian LLPs.
The first thing that you will need to focus on after the LLP registration must be on submitting the LLP Agreement. Once you receive the LLP certificate, you need to submit the agreement in 30 days. This LLP Agreement must be attached to Form 3. Further, before submission, you also need to ensure that the LLP Agreement is duly registered with the Registrar of Companies (ROC). To ensure that all the information of your LLP agreement is accurate and up to date.
PAN stands for Permanent Account Number. For all Limited Liability partnerships in India, it is mandatory to have a separate PAN for the body corporate. The PAN is issued in the form of a laminated plastic card. Besides, in India, PAN is mandatory for all business owners whose annual turnover is exceeding INR 5 lakhs in any previous year. You can apply for a PAN Application of an LLP online through the government website (UTIITSL).
Opening a Bank Account
Having a separate legal existence is one of the most favorable factors of an LLP in India. However, because of this, there is a boundary between the owner and LLP. Hence, it is mandatory for all LLPs registered in India to have a separate bank account, which is also referred to as a current account. Having this makes it easier to maintain the books of accounts. Further, it will also help you keep track of the financial transactions made by the company. The process of opening a bank account differs based on the bank you choose. However, in any case, be mindful of the Know Your Customer (KYC) requirements and process.
Annual Compliance Requirement
According to the governing laws, all LLPs registered in India have to submit two documents annually. These compliance requirements include the following forms:
- Form 8: LLP Form 8 is the form that allows an LLP to provide its statement of its accounts and solvency. This form is supposed to be submitted on or before 30th October of each year.
- Form 11: Submitting this form gives an insight into the partners of an LLP. The LLP owners need to furnish the annual returns of the LLP through Form 11 to the authorities. The due date for filing Form 11 is within 60 days of the end of a financial year, i.e., 30th May every year.
Submitting both of these forms is mandatory annual compliance for LLPs. So, the non-compliance of this leads to hefty penalties and charges.
Filing Income Tax Returns
Each year, the income tax department makes it mandatory for all earners to submit a statement of income and expenses in a prescribed format. This is known as filing the income tax returns. ITR 5 is the form applicable to Limited liability partnerships in India. Filing ITR is a very important compliance matter. Further, if your LLP falls under Section 44AB of the income tax act, and is required to undergo a mandatory audit, then you need to take care of such audit requirements as well before being able to file your taxes.
Intellectual Property Registrations
If you aim to run a successful business in India, you need to take steps to protect your brand identity and intellectual properties. You can opt for the following IP registrations for this purpose:
- Trademark registration: this will help you in protecting your brand name, logo, packaging material, tagline, company name, etc.
- Copyright registration: This registration protects the rights of the original owner of a creative work to create copies of that creative work. For example, you can seek copyright registration for your LLP’s unique written content, source code, creative artworks you use, any sound recording or musical work, sculptures, etc.
- Patent Registration: patent is an IP that promotes innovation and invention. So, whenever you create a unique and novel item that is capable of industrial application, you can apply for its patent grant. Having a patent grant will also be beneficial for your LLP in seeking investment opportunities.
For all Limited Liability Partnerships that fulfill either of the following conditions:
- capital investment exceeds Rs.25 lakhs; or
- annual revenue exceeds Rs. 40 lakhs
It is mandatory to get an audit of the LLP by a certified chartered accountant. This is a very important compliance requirement. If you fail to comply with the law. The LLP and its owners are held liable with hefty penalties.
After reading through the post llp formation compliance requirements, it is quite clear that the LLP owners need to take care of all these post-registration formalities. So, to focus on your business after LLP registration, you can hire online certified professionals that will take care of your compliance requirements!