Post Incorporation LLP Compliances

Introduction

Limited Liability Partnership or LLP after it gets incorporated includes several compliances and these are mandatory compliance as per law. Even if there is delay in starting business activity, these compliance must be completed to remain compliant as per the law. These compliances should be completed on time, otherwise you have to pay heavy penalties. LLP is an artificial person hence compliance must be done by partners of the LLP. These compliances completed just after the incorporation of LLP or within 30 days after its formation. However, there are also few annual compliances that need to be completed yearly. In this article we will discuss post incorporation compliances for LLP. 

What is a limited liability partnership?

A limited Liability Partnership is separated from its members and they are liable only for the amount they invested. Limited Liability Company includes the benefits of both a company and a partnership. In a LLP Company, partners' personal assets are safe and secure. In case of any debt or liability of a company, they don’t need to pay from their personal assets as LLP is considered as a separate legal entity. The LLP used to take legal actions in its own name. They are able to enter into contracts and can hold property on their own. This structure helps in appealing to professionals like accountants, attorneys, and consultants as it permits flexibility in management without the formality needed in a corporation.

What are the post incorporation LLP Compliances?

After an LLP is registered and CIN number is issued, it must complete certain compliances and procedural agreements within a few days of its incorporation. These compliances should be generally completed within 30 days, 60 days or on by a specific deadline, depending on the requirement. They include a LLP agreement filing (LLP-Form 3), opening a bank account in the LLP’s name etc. Additionally, LLPs should comply with certain annual filings like Form 11 (Annual Return) and Form 8 (Statement of Account & Solvency). Also, it is mandatory to maintain a proper book of account. If their turnover exceeds ₹40 lakhs or contribution exceeds ₹25 lakhs, they must conduct audits and file annual income tax return. Compliance also extends to updating the ROC about alteration such as partner addition or removal, registered office changes, and amendments to the LLP Agreement. Timely and accurate completion of post registration requirements ensures that the LLP stays in good legal standing and avoids penalties or legal issues

List of Compliances for LLP

Following are the compliances needed to be done within a specific due date. These compliance are important from a legal viewpoint. Also you need to bear heavy penalties if the compliances are not accurate. Separate PAN and TAN applications are not required now. PAN and TAN letter comes along with incorporation of LLP on registered company email.

Mandatory Compliances Within 30 days 

The compliances should be followed by the firm after incorporation. Remember the compliances that should be done within 30 days performed only for one time while the annual compliances need to be completed every year. The compliances for LLP within 30 days are as follow:

• LLP Agreement or Form 3 Filings: LLP Agreement is a written contract which legally binds all the partners of the business. It includes rights and responsibilities of the members in the organization. It also contains the rules and the regulations of the company as per Limited Liability Company Act 2000. The failure of the LLP Agreement fines ₹100 per day with no boundary of maximum fine. It is one of the most important documents of LLP as it outlines the complete working and terms and conditions related to LLP. LLP agreement is property signed and notarised as per state Rules by all partners along with witness signatures. It has to be properly stamped with an LLP seal. Once the LLP agreement is complete it must be filed with ROC through Form 3 within 30 days of incorporation date. LLP can do any further form filings only once Form 3 is filed with MCA. 

• LLP Seal: A Limited Liability Partnership Company requires certain compliances. But the compliances can not be fulfilled without the company's seal. So, the first basic need is to obtain a LLP seal. LLP seal is required to sign any contracts or agreements on behalf of LLP. It is also required for opening bank accounts of LLP and Signing LLP agreement. Two seals one of LLP name and CIN no and second of LLP name with designation to be made.

• LLP Name Board and LLP stationery : A letterhead for an LLP is an important thing to communicate. A letterhead should include name, registered office address, email and a phone number. LLP Company board having CIN no and complete name should also be made and put on register office address. It is also required by banks these days as proof of the existence of LLP.

• Opening a Bank Account: Another thing to do is opening a bank account with the name of the LLP. A bank account can be opened easily, as it is considered as a corporate entity. To open a bank account, certain documents are required and they are as follow:

• Photocopy of the LLP Agreement
• Photocopy of Incorporation Documents and DPIN of the designated partner
• Photocopy of LLP Registration certificate issued by ROC 
• Photocopy of bank account opening resolution
• Signature of the authorized partners of LLP 
• Photocopy of PAN or PAN allotment letter

• Book of Accounts: Maintaining books of accounts and preparing financials is mandatory for LLP. This record can be maintained manually in a register at the registered office. Also one can hire a chartered accountant to maintain these records. It's important to start maintaining books and records expenses of LLP immediately after incorporation.

Other Mandatory Annual Compliances of LLP

There are certain mandatory compliances for LLPs that need to be completed annually. These compliances include Form-11, form-8, ITR, designated partner KYC, etc. 

• Form-11: Form-11 is an annual return for LLP to be filled before 30th May. Form-11 needs to be filled even if the business does not carry out any operations or business during the financial year. This form includes details of total contribution by/to partners of the LLP, details of notice received towards penalties imposed or compounding offenses committed during the financial year.

• Form-8: Form-8 is a declaration of accounts and solvency. It must represent the financial transactions carried out during the whole financial year. The form-8 must be filed within 30 days from the end of the six months of the financial year to which it relates. In simple words on or before 30 october this form must be filed.

• ITR Filing: ITR Filing is another compliance required after incorporation of the company. ITR-5 Form is used to file the ITR before 31 july. Also, LLP whose revenue exceeds 40 lakh or contribution exceeds 25 lakh are required to have their accounts audited by a qualified CA. 

• Designated Partners KYC: It is a process in which designated partners need to verify their personal details with the Ministry of Corporate Affairs (MCA). Any designated partner who has DPIN or DIN must file the KYC form annually. They need to submit their KYC with the DIR-3 KYC form. The KYC process must be completed annually. Usually the due date is 30 September each year for the previous financial year. 

Other Post Incorporation Registration

Apart from the compliances with due dates, there are certain optional relevant responsibilities that beyond from due date. These tasks can be performed anytime by the incorporated company. These compliances should be done so that they can plan to improve their operational efficiency, legal protection and growth prospects.

These compliances listed several specific licenses, IPR registration, GST registration, and MSME registration It promotes transparency, credibility, and competition in the marketplace. However, it is an optional registration and not a lawful requirement. 

• GST Registration: GST Registration is important for companies that provide goods or services. It guarantees compliance to the Goods and Services Tax (GST) system and also helps in smooth input tax credit, and builds supplier and consumer reputation. Businesses must register under GST if their yearly revenue exceeds the legal level of INR 40 lakhs (INR 20 lakhs for service providers).

• MSME Registration: MSME Registration helps small, medium sized businesses for multiple purposes. In order to increase access to government programs, subsidies, and finance, businesses required MSME Registration. It improves market visibility, competitiveness, and growth opportunities. 

• Industry Specific License: This license is required by some companies who engage in regulated industries including manufacturing, food processing e.g. FSSAI, IEC etc. Following industry regulations ensures compliance with legal requirements, consumer protection, and industry standards. To operate lawfully, businesses in sectors subject to certain standards, laws, or licensing requirements need to get licenses relevant to their sector. 

• IPR/Trademark Registration: Trademark registration and intellectual property rights (IPR) protect an organization's original concepts, innovations, and identity. They fortify brand reputation and market positioning, improve market exclusivity, and guard against infringement. An application for intellectual property rights (IPR) or trademark registration may be made by any person or business entity that currently possesses or plans to acquire intellectual property assets, such as designs, trademarks, copyrights, or inventions. 

• Professional Tax Registration: Another compliance includes professional tax registration. In India, companies that hire professionals or skilled laborers are required to get this registration completed. It is a state level tax on income received by people. It can be in the form of trades, occupations, and professions. Professional tax is paid by professionals through PT registration. Some penalties, fines and legal law may be levied by the state tax authorities for noncompliance with the provision. 

In case if the company does not obtain a professional tax registration, it can lead as a violation of tax laws, which could affect its legal operation. Also it draws more attention from regulatory bodies. 

Conclusion

There is a lot of compliance to be done after incorporation of LLP. It is crucial for smooth functioning of an LLP. One should maintain an accurate record and file these compliance on time. If the compliances are not filed on time, heavy penalties may be charged. By filing compliances on time, one can focus on the growth of the business. Proper and accurate compliances protect the LLP from legal obligation as well it increase credibility and stability in the business environment. The compliances should be completed within 30 days, 60 days and on specific dates depending on its type. 

Frequently Asked Questions (FAQs)

1) Is ROC filing mandatory for LLP? 

Yes, LLPs are required to file Form-11 with ROC after the incorporation. 

2) What is the limit of an LLP Audit? 

If the turnover exceeds Rs. 40 lakh or its contribution exceeds Rs. 25 lakh, LLP is required to get its accounts audited.

3) What is Form-11 in LLP? 

Form-11 is an annual return for LLP that needs to be filled even if the business does not carry out any operations or business during the financial year.

4) Is section 44AB required in LLP?

LLPs with a turnover of exceeding INR 1 Cr. for business or INR 50 lakh for a profession are required to undergo a tax audit as per section 44AB of Income-tax Act.