LLP Annual Compliance and Turnover Limit For Audit

LLP Annual Compliance and Turnover Limit For Audit. LLP is a Corporate Business with the feature of Limited Liability which is a hybrid form of Company and Partnership Firm. Nowadays, LLP Registration is the new favorite form of business for many, as it allows its members the flexibility of organizing their internal structure as a partnership firm while at the same time it contains some unique features of a Company. In legal terms, LLP is a body corporate formed and incorporated under the Limited Liability Partnership Act, 2008 and is a legal entity separate from that of its partners, and has perpetual succession, and change in its partners does not affect its existence.
Foreign Limited Liability Partnerships: It means a Limited Liability Partnership formed, incorporated, or registered outside India which establishes a place of business within India.
The Limited Liability Partnership (Amendment) Act, 2021, introduces a new concept of Small Limited Liability Partnerships, to encourage the entrepreneurs, in line with the concept of a small company under The Companies Act 2013, any LLP with a contribution up to Rs. 25 lakh (this limit may be increased up to Rs. 5 crores) and a turnover up to Rs. 40 lakh (this limit may be increased up to Rs. 50 crores) will be classified as a small LLP. Such small LLP would be subject to lesser cost of compliances, lesser fees or penalties, etc. however it shall come into force on such date as the Central Government may, by notification in the Official Gazette specify.
LLP: How has it become a favorite form of business for many?

Firstly, its prefix "Limited Liability attracts a person to form LLP rather than a Partnership Firm.

LLP is a separate legal entity from its partners, has perpetual succession as like the company, and can be formed with two partners only and there is no limit for the maximum number of partners in LLP.

There is no minimum capital requirement, no partner’s compulsory meeting requirement, in the LLP.

Funds can be raised only through partners, bank loans, as cannot issue shares or debentures.

Registration of an LLP is compulsory.

LLP Annual Compliances:
Every LLP registered under the Ministry of Corporate Affairs (MCA) need to comply with the following compliances:

Filing of annual return.

Filing statement of account & solvency.

Filing of income tax returns.

Maintenance of books of accounts and documents.

Filing OF Annual Return:
FORM -11 is the Annual return form required to be filled with the registrar of companies, for every LLP, irrespective of its turnover, within 60 days of the closure of the financial year i.e. on or before 30th May every year.  Even when any LLP does not carry any business operation, it has to file an annual return.
If any LLP fails to file its annual return within the prescribed time period above, a penalty of Rs. 100 (one hundred only) per day shall be levied on such LLP and its designated partners during which such failure continues.
Annual Compliance for LLPs Incorporated on or after October 1st
When a Limited Liability Partnership (LLP) is incorporated on or after October 1st of a financial year, it has the flexibility to close its first financial year either on the upcoming 31st March or the next 31st March. This effectively allows the LLP to extend its first financial year to a maximum of 18 months. Here are the key points related to annual compliance and audit for such LLPs:

Financial Year Ending:

Option 1: Close the first financial year on the upcoming 31st March. For instance, if the LLP is incorporated on October 10, 2023, it can close its financial year on March 31, 2024.

Option 2: Extend the first financial year to the next 31st March. Using the same example, the LLP can close its first financial year on March 31, 2025.

Annual Filing of LLP Compliance:

Annual Return (Form 11): Every LLP is required to file an Annual Return within 60 days from the end of the financial year. If the LLP chooses to extend its first financial year to 18 months, the due date will be calculated accordingly.

Statement of Accounts and Solvency (Form 8): This form needs to be filed within 30 days from the end of six months of the financial year. If the LLP extends its financial year to 18 months, the due date will be adjusted based on the new financial year end.

Income Tax Return: The LLP must file its Income Tax Return by July 31 of the assessment year if audit is not required, or by September 30 if audit is required.

Audit Requirements:

An LLP is required to get its accounts audited if its turnover exceeds Rs. 40 lakh or its contribution exceeds Rs. 25 lakh. This applies regardless of the length of the financial year.

For LLPs opting for an 18-month financial year, the audit would cover the entire period up to the chosen financial year end (March 31, 2025, in the example).

Detailed Steps for Compliance

Determine the Financial Year End:

Decide whether to close the financial year on the upcoming 31st March or the next 31st March based on business needs and compliance convenience.

Maintain Proper Books of Accounts:

Ensure that all financial transactions are recorded accurately, and books of accounts (Book Keeping & Accounting) are maintained as per statutory requirements.

Prepare Financial Statements:

Prepare the financial statements at the end of the financial year chosen.

File Annual Return (Form 11):

File the annual return within 60 days from the end of the financial year. For an LLP closing on March 31, 2025, the due date would be May 30, 2025.

File Statement of Accounts and Solvency (Form 8):

File the statement within 30 days from the end of six months of the financial year end. For an LLP closing on March 31, 2025, the due date would be October 30, 2025.

Income Tax Return:

File the LLP Income Tax Return as per the due dates applicable based on whether an audit is required.

Filing statement of Account and Solvency:
The word solvency indicates the ability of LLP to pay off its debt. So every LLP is required to file its solvency declaration in FORM-8 (Statement of Account & Solvency) with the registrar of companies for every LLP within a period of 30 days from the end of six months of the closure of the financial year i.e. on or before 30th October each year.
Form 8 consists of two parts-
Part A: statement of solvency
Part B: statement of income and expenditures
In case of non-compliance of the above, a penalty of Rs. 100 (one hundred) per day shall be imposed on such LLP during which such failure continues.
Filing of Income Tax Returns:
Every LLP is required to file its income tax return in the form of ITR-V every year. LLP must file the return of income electronically under digital signature if its accounts are required to be audited under section 44AB.

INCOME TAX RETURN

DUE DATE FOR A.Y. 2024-25

A.    IN CASE OF AUDIT IS NOT REQUIRED

31st  DECEMBER 2024

B.    IN CASE AN AUDIT IS REQUIRED

15th  FEBRUARY 2024

LLP Audit requirements
LLP whose turnover exceeds Rs. 40 lakh or whose partner’s contribution exceeds Rs. 25 lakh, is required to get its annual accounts audited by a Chartered Accountant in practice only mandatorily. Whereas other LLPs whose turnover and contribution do not exceed the above limit, also get their annual accounts audited voluntarily.
Maintenance of books of Accounts and Documents:
Every LLP is required to maintain its proper books of accounts on a cash or accrual basis for the financial year ending 31st March every year. Books of account contain all the information regarding incomes, expenditures, assets, and liabilities of the LLP, and the same can be maintained at the registered office of such LLP and shall also be preserved for such time period as may be specified.

ROC Compliance Calendar for LLP:

PURPOSE

PARTICULARS

E-FORM

DUE DATE

ANNUAL RETURN

Every LLP is required to file its annual return within 60 days of closure of the financial year.

LLP-11

30TH MAY

STATEMENT OF ACCOUNTS AND SOLVENCY

A statement of accounts and solvency shall be filed within 30 days from the end of six months of the closure of its financial year.

LLP-8

30TH OCTOBER

Hence,  an LLP incorporated on or after October 1st can opt to extend its first financial year to up to 18 months, offering flexibility in managing compliance timelines. By adhering to the statutory requirements for filing annual returns, statements of accounts, and income tax returns, LLPs can ensure they remain compliant with the regulatory framework. Proper planning and timely filing are crucial to avoid penalties and maintain good standing.
How can the Compliance Calendar Help:
Compliance Calendar LLP has a dedicated team of professionals who carry with themselves relevant experience in LLP compliances in India. Our team can help you in understanding the compliance framework applicable to your LLP business while at the same time we can advise you in the detailed compliance requirement to safeguard you and your business from penalties.
We can also assist you with the preparation of your financial statements, submission of MCA Annual Returns, Income Tax Filings and all documentation to ensure that you always comply with the law.
If you have any question, don’t worry! Our compliance team will assist you with the best advice. Get in touch with us to get all your queries resolved. You can reach us at +91-9988424211 via call/message or email us your queries at info@ccoffice.in

LLP is a Corporate Business with the feature of Limited Liability which is a hybrid form of Company and Partnership Firm. Nowadays, LLP Registration is the new favorite form of business for many, as it allows its members the flexibility of organizing their internal structure as a partnership firm while at the same time it contains some unique features of a Company. In legal terms, LLP is a body corporate formed and incorporated under the Limited Liability Partnership Act, 2008 and is a legal entity separate from that of its partners, and has perpetual succession, and change in its partners does not affect its existence.

Foreign Limited Liability Partnerships: It means a Limited Liability Partnership formed, incorporated, or registered outside India which establishes a place of business within India.

The Limited Liability Partnership (Amendment) Act, 2021, introduces a new concept of Small Limited Liability Partnerships, to encourage the entrepreneurs, in line with the concept of a small company under The Companies Act 2013, any LLP with a contribution up to Rs. 25 lakh (this limit may be increased up to Rs. 5 crores) and a turnover up to Rs. 40 lakh (this limit may be increased up to Rs. 50 crores) will be classified as a small LLP. Such small LLP would be subject to lesser cost of compliances, lesser fees or penalties, etc. however it shall come into force on such date as the Central Government may, by notification in the Official Gazette specify.

LLP: How has it become a favorite form of business for many?

Firstly, its prefix "Limited Liability attracts a person to form LLP rather than a Partnership Firm.
LLP is a separate legal entity from its partners, has perpetual succession as like the company, and can be formed with two partners only and there is no limit for the maximum number of partners in LLP.
There is no minimum capital requirement, no partner’s compulsory meeting requirement, in the LLP.
Funds can be raised only through partners, bank loans, as cannot issue shares or debentures.
Registration of an LLP is compulsory.

LLP Annual Compliances:

Every LLP registered under the Ministry of Corporate Affairs (MCA) need to comply with the following compliances:

Filing of annual return.
Filing statement of account & solvency.
Filing of income tax returns.
Maintenance of books of accounts and documents.

Filing OF Annual Return:

FORM -11 is the Annual return form required to be filled with the registrar of companies, for every LLP, irrespective of its turnover, within 60 days of the closure of the financial year i.e. on or before 30th May every year. Even when any LLP does not carry any business operation, it has to file an annual return.

If any LLP fails to file its annual return within the prescribed time period above, a penalty of Rs. 100 (one hundred only) per day shall be levied on such LLP and its designated partners during which such failure continues.

Annual Compliance for LLPs Incorporated on or after October 1st

When a Limited Liability Partnership (LLP) is incorporated on or after October 1st of a financial year, it has the flexibility to close its first financial year either on the upcoming 31st March or the next 31st March. This effectively allows the LLP to extend its first financial year to a maximum of 18 months. Here are the key points related to annual compliance and audit for such LLPs:

Financial Year Ending:

Option 1: Close the first financial year on the upcoming 31st March. For instance, if the LLP is incorporated on October 10, 2023, it can close its financial year on March 31, 2024.
Option 2: Extend the first financial year to the next 31st March. Using the same example, the LLP can close its first financial year on March 31, 2025.

Annual Filing of LLP Compliance:

Annual Return (Form 11): Every LLP is required to file an Annual Return within 60 days from the end of the financial year. If the LLP chooses to extend its first financial year to 18 months, the due date will be calculated accordingly.
Statement of Accounts and Solvency (Form 8): This form needs to be filed within 30 days from the end of six months of the financial year. If the LLP extends its financial year to 18 months, the due date will be adjusted based on the new financial year end.
Income Tax Return: The LLP must file its Income Tax Return by July 31 of the assessment year if audit is not required, or by September 30 if audit is required.

Audit Requirements:

An LLP is required to get its accounts audited if its turnover exceeds Rs. 40 lakh or its contribution exceeds Rs. 25 lakh. This applies regardless of the length of the financial year.
For LLPs opting for an 18-month financial year, the audit would cover the entire period up to the chosen financial year end (March 31, 2025, in the example).

Detailed Steps for Compliance

Determine the Financial Year End:

Decide whether to close the financial year on the upcoming 31st March or the next 31st March based on business needs and compliance convenience.

Maintain Proper Books of Accounts:

Ensure that all financial transactions are recorded accurately, and books of accounts (Book Keeping & Accounting) are maintained as per statutory requirements.

Prepare Financial Statements:

Prepare the financial statements at the end of the financial year chosen.

File Annual Return (Form 11):

File the annual return within 60 days from the end of the financial year. For an LLP closing on March 31, 2025, the due date would be May 30, 2025.

File Statement of Accounts and Solvency (Form 8):

File the statement within 30 days from the end of six months of the financial year end. For an LLP closing on March 31, 2025, the due date would be October 30, 2025.

Income Tax Return:

File the LLP Income Tax Return as per the due dates applicable based on whether an audit is required.

Filing statement of Account and Solvency:

The word solvency indicates the ability of LLP to pay off its debt. So every LLP is required to file its solvency declaration in FORM-8 (Statement of Account & Solvency) with the registrar of companies for every LLP within a period of 30 days from the end of six months of the closure of the financial year i.e. on or before 30th October each year.

Form 8 consists of two parts-

Part A: statement of solvency

Part B: statement of income and expenditures

In case of non-compliance of the above, a penalty of Rs. 100 (one hundred) per day shall be imposed on such LLP during which such failure continues.

Filing of Income Tax Returns:

Every LLP is required to file its income tax return in the form of ITR-V every year. LLP must file the return of income electronically under digital signature if its accounts are required to be audited under section 44AB.

INCOME TAX RETURN	DUE DATE FOR A.Y. 2024-25
A. IN CASE OF AUDIT IS NOT REQUIRED	31st DECEMBER 2024
B. IN CASE AN AUDIT IS REQUIRED	15th FEBRUARY 2024

LLP Audit requirements

LLP whose turnover exceeds Rs. 40 lakh or whose partner’s contribution exceeds Rs. 25 lakh, is required to get its annual accounts audited by a Chartered Accountant in practice only mandatorily. Whereas other LLPs whose turnover and contribution do not exceed the above limit, also get their annual accounts audited voluntarily.

Maintenance of books of Accounts and Documents:

Every LLP is required to maintain its proper books of accounts on a cash or accrual basis for the financial year ending 31st March every year. Books of account contain all the information regarding incomes, expenditures, assets, and liabilities of the LLP, and the same can be maintained at the registered office of such LLP and shall also be preserved for such time period as may be specified.

ROC Compliance Calendar for LLP:

PURPOSE	PARTICULARS	E-FORM	DUE DATE
ANNUAL RETURN	Every LLP is required to file its annual return within 60 days of closure of the financial year.	LLP-11	30TH MAY
STATEMENT OF ACCOUNTS AND SOLVENCY	A statement of accounts and solvency shall be filed within 30 days from the end of six months of the closure of its financial year.	LLP-8	30TH OCTOBER

How can the Compliance Calendar Help:

Compliance Calendar LLP has a dedicated team of professionals who carry with themselves relevant experience in LLP compliances in India. Our team can help you in understanding the compliance framework applicable to your LLP business while at the same time we can advise you in the detailed compliance requirement to safeguard you and your business from penalties.

We can also assist you with the preparation of your financial statements, submission of MCA Annual Returns, Income Tax Filings and all documentation to ensure that you always comply with the law.

If you have any question, don’t worry! Our compliance team will assist you with the best advice. Get in touch with us to get all your queries resolved. You can reach us at +91-9988424211 via call/message or email us your queries at info@ccoffice.in