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2018

FAQs on Limited Liability Partnership

Frequently Asked QuestionsFAQon Limited Liability Partnership

Introduction:
Limited Liability Partnership (LLP) is a new model of business formation which gives benefits of both world. In other words, LLP is a form of business that combines benefits of both company and partnership firm. LLP is a type of partnership firm where partners have limited liabilities unlike the traditional model of partnership firm where all partners have unlimited liability. In LLP each partner is independent from any liability towards another partner's misconduct or negligence. Moreover, an PPL has less compliance burden as compared to company form of business.
Limited Liability Partnership being a relatively new form of business, many people are unaware of its features, benefits and compliance requirements. Here is a list of FAQs for all matters related to LLPs.

1. What is the minimum requirement for number of partners to form an LLP?

ANS: At least two partners are required to form an LLP.

2. Under which act of parliament an LLP is formed and governed?

ANS: LLP is formed and governed by Limited Liability Partnership Act, 2008.

3. What is the maximum limit for number of partners in an LLP?

ANS: There is no maximum threshold limit for number of partners in an LLP.

4. How many designated partners are required in an LLP?

ANS: An LLP must have at least two designated partners.

5. What are the compliance requirements associated with appointment of designated partners?

ANS: A partner must follow below compliance requirements to be appointed as designed partner:

  • At least one designated partner must be a resident
  • Each partner must give his consent to the partner being appointed as designated partner.
  • LLP must intimate ROC within 30 days of appointment of designated partner.
  • A partner intending to be appointed as designated partner must obtain Director's Identification Number.


6. What are Annual filing compliance requirements for an LLP?

ANS: There are mainly 3 compliances which are mandatory for every LLP for any financial year.

  • Annual Return
  • Financial Statements of the LLP
  • Income Tax Returns Filings

7. Does an LLP require to file annual return in case no business is carried out during a financial year?

ANS: Yes, every LLP has to mandatorily file Annual Returns and financial statements with the Ministry even if they are not doing any business. It is a compulsory requirement of law that even NIL returns should be filed.

8. What is the Audit Requirement for LLP?

ANS: Every LLP must get its accounts audited if

  • Turnover exceeds Rs. 40 Lack in a year
  • Partner's contribution exceeds Rs. 25 lack in any FY.
  • Audit must be conducted by a practicing CA.

9. What are the due dates for filing Statement of Accounts and Annual Return for LLP?

ANS: Please refer to the below table for details:

Type of document Form Due Date Description
Annual Return Form 11 30th May after end of FY Annual Return is a Summary of all the Designated Partners and whether there are any changes in the management of the LLP or not.
Statement of Accounts Form-8 30th October after end of FY From 8 is to be filed by at least two Designated Partners with the Registrar within 30 days after completion of six months of Financial Year. 30th October is the last date for filing annual accounts every year.


10. What are the Income Tax Compliance of LLP?

ANS: Following compliance are required to be followed by every LLP as prescribed under Income Tax Act.
Tax Audit Requirement for LLP: Every LLP whose turnover exceeds INR 1 Cr. in case of a business or INR 50 Lakh in case of a profession, is required to get its books of accounts tax audited under section 44AB of the Income-tax Act.
Income Tax Return Filing: In case if an LLP is not required to get its books of accounts audited, the last date of filing of return for LLP is 31st July every year.
In case if tax Audit is required, the last date of return filing would be 30th September after the end of financial year.

11. What are the consequences of non-filing of LLP returns?

ANS: In case of non-filing of annual return by an LLP within stipulated period of time, a penalty of Rs. 100 per day is charged from the due date till actual filing of annual return. it is further provided that an LLP cannot be liquidated until and unless annual return is filed.

Compliance Calendar of LLP:

Form Type Described Due date To be filed with
Form-8 Filing of Statement of Accounts 30th October Registrar of Companies
Form-11 Filing of Annual Returns 30th May Registrar of Companies
ITR -5 Income tax return without tax audit requirement 31st July Income tax department
  Income tax return with tax audit requirement 30thSeptember Income tax department
Audit Tax Audit (only if applicable) 30th September Income tax department

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