Many Bangalore-based startups and small businesses believe legal compliance for LLP is optional or can be postponed. However, ignoring compliance often leads to legal complications, heavy penalties, and dissolution.
Before that, what exactly is LLP? A limited liability partnership (LLP) is a business structure with two or more partners having the liability only for their capital investment in the partnership. The LLP would work independently even if partners change over time.
Now you might wonder what financial statements and regulations you must abide by to keep your partnerships clean. Worry not, in this expert legal compliance checklist for LLP, you will get to know all the necessary compliance details and procedures you must stick to.
Get The Expert Legal Compliance Checklist For LLPs
Table of Contents
What is LLP Legal Compliance?
LLP compliance in India is a mandatory set of legal, and financial obligations to be filed with the Ministry of Corporate Affairs (MCA), at the end of every financial year. Explore the List of Mandatory Annual Compliances For LLP which are crucial for a new business owner to understand.
These annual compliances ensure:
- Transparency in LLP operations
- Fulfillment of tax obligations
Comply with MCA regulations
Why LLP Legal Compliance is Important for Bangalore Based Startups?
Startups and new businesses in Banglore prefer the LLP business model for its flexible partnership, limited liabilities, and tax benefits. Let’s get to know some of the major benefits:
- Legal protection is the main advantage you get with LLP compliance as non-compliance can lead to liabilities, unsettled disputes, restrictions on business activities, and more.
- With regular annual compliance, you can avoid substantial penalties that add up with delay even for a day while preventing uncertain legal complications and financial depletion.
- Annual compliance ensures protection of legal status and enhances your LLP reputation, which otherwise might lead to difficulty in securing loans, attracting investors, or getting into contracts with large organizations.
- LLP Annual compliance ensures smooth workflow and transparency in the business. This eventually enhances business continuity and transferring ownership in the future can be made without any uncertainties.
- Converting your LLP into a corporate entity can be made easy on fulfillment of annual compliance as the filed records show the company’s strength and ease the settlement process.
LLP Compliance Checklist - Expertly Drafted For Bangalore Businesses
Here’s the curated compliance checklist for LLPs to be filed:
1. Annual Return (Form 11)
Annual Return or Form 11 consists of a summary of the affairs and management of the company along with the partner’s names. This must be filed every financial year before May 30th.
Penalty: If Form 11 is not filed on time, you will be charged a fine of ₹100 per day until the compliance is registered.
Side Note: This must be filed irrespective of the business activities conducted in that particular year.
2. Statement of Accounts and Solvency (Form 8)
Statement of Accounts and Solvency includes statements on profit & loss, balance sheets, and declaration of solvency. Form 8 must be filed before October 30th.
Penalty: Delaying to file Form 8 charges ₹100 per day as a fine until the compliance requirement is met.
3. Income Tax Return (ITR-5)
ITR-5 is mandatory for all LLPs irrespective of their income, profit, and loss. The deadline for non-audited LLPs is 31st July and for audited LLPs is September 30th after the audit is completed by a professional CA. Get more information about the Last Date for ITR Filings for FY 2024-25.
Penalty: Filing ITR-5 beyond the deadline incurs ₹5000 as a penalty.
Note: The above 3 compliances are mandatory for any LLP.
4. LLP Agreement (Form 3)
Form 3 must be filed to address the clarity in roles, responsibilities, and norms of business functionalities. You need to file the LLP agreement only once within 30 days of incorporation of the company. Under our LLP registration services, you can get the right LLP agreement with no flaws in it.
Penalty: You will be fined ₹100 per day if you don’t file this form on time.
5. Director Identification Number (DIN) Updates
This compliance ensures all the Director Identification Numbers (DIN) of all designated partners are active and updated. The deadline for DIN updates is 30th September.
6. Other Compliance Obligations
As per MCA guidelines, LLPs must register GST returns, Income tax returns, and event-based filings. You must also maintain up-to-date papers on financial transactions, partner details, and minutes of meetings.
Bonus Point: If your LLP is involved in international or specified domestic transactions, filing Form 3CEB before November 30th is mandatory.
What are the Necessary Documents to file Annual LLP Compliances?
Here’s the list of documents you must keep in hand to file LLP compliances:
- Bank statements between April 1st and March 31st of all the bank accounts registered under your LLP’s name.
- Credit card statements for any partner-incurred expenses on behalf of the company.
- Invoices of purchase, sales, and expenses incurred during the year.
- GST, VAT, and other Tax returns.
- TDS filing, challan deposits (if made during the year).
Legal Compliance Checklist for LLP: Life Saving Steps for Founders
These are the life-saving steps to keep your LLP compliances clean and up-to-date-
- Legal understanding is the first step in actively adhering to annual LLP compliance. Start by learning the legal obligations of an LLP corporation. Watch news and guidelines to stay updated and make informed decisions.
- It’s important to file annual compliance on time. Maintain detailed and daily records of financial transactions, bank statements, invoices, and receipts.
- Use reminders or document the deadline to avoid delay in the submission of compliance forms.
- Compliance experts can guide you with compliance filings. Consult with professional compliance experts on filings, audits, and overall compliance to ensure that your LLP adheres to all the legal requirements.
- Stay up-to-date with ongoing regulatory changes and industry benchmarks so that you can adapt to the changes quickly.
What Next: Hire Experts to keep Your LLP Compliant
Now that you are aware of the LLP compliance checklist, it’s high time you act immediately on filing all the requisites.
At Actax, we have a team of Compliance experts with 8+ years of experience in the industry. We ease the compliance of Bangalore-based LLPs through our expert consultation and handle the next steps in the annual filing process.
On top of the cherry, we provide customizable compliance packages that you can choose based on your business structure and size.
You focus on the other major elements of your business operations while we handle all the tensions of maintaining your records and papers.
