📃 What is an LLP?

A Limited Liability Partnership (LLP) is a hybrid structure between a partnership firm and a private limited company, allowing businesses to operate under a corporate framework while being guided by the terms of a mutually adopted partnership deed.

📄 What are the advantages of registering as an LLP over general partnership firms?

🔍 Does the Income Tax Act treat partnership firms and LLPs differently?

• Taxation Structure: Both are taxed at 30%, but LLPs allow for partner remuneration deductions.
• Remuneration to Partners: LLPs can deduct partners’ remuneration; partnerships cannot.
• Distributions of Profits: Both types exempt partners from tax on profit shares, but LLPs allow for taxable remuneration.
• Filing Requirements: Both must file returns, but LLPs have additional compliance under their act.
• Audit Requirements: Firms require audits above ₹1 crore; LLPs require audits above ₹40 lakh or ₹25 lakh in contributions.

Other tax provisions apply similarly, but general partnerships can benefit from presumptive taxation under 44AD which LLPs cannot.

• Partnership Firms:
  • Can benefit from presumptive taxation under Section 44AD if their turnover is up to ₹2 crore.
• LLPs:
  • Eligible for presumptive taxation under Section 44ADA, with a lower turnover limit of ₹75 lakh for professional services.

💰 What is the minimum capital requirement for LLPs?

There is no minimum capital contribution requirement. An LLP can be registered with as little as ₹100 as total capital contribution.

📊 What is the audit requirement for an LLP?

• Threshold Limits: An LLP is required to undergo an audit if it meets any of the following criteria:
  • Turnover: The annual turnover exceeds ₹40 lakh.
  • Contribution: The total contribution from partners exceeds ₹25 lakh.
• Mandatory Audit: If the above thresholds are met, a statutory audit is mandatory, and the LLP must appoint a Chartered Accountant (CA) for this purpose.
• Annual Compliance: Even if an audit is not required, LLPs must comply with annual filing requirements, including the filing of financial statements and the annual return with the Ministry of Corporate Affairs (MCA).
• Voluntary Audit: LLPs below the threshold limits can opt for a voluntary audit for better financial management and credibility.

📊 What is the Annual Compliance for an LLP?

• 1. Filing of Annual Return

  • Form 11: LLPs must file an annual return in Form 11 with the Registrar of Companies (RoC) within 60 days from the end of the financial year.
  • Content: This form includes details of the LLP, partners, and changes (if any) during the year.
  • Initial Penalty: A late fee of ₹100 per day of delay, subject to a maximum of ₹10,000.

  2. Filing of Statement of Accounts

  • Form 8: LLPs are required to file a Statement of Accounts in Form 8 with the RoC within 30 days of the end of the 6-month period (i.e., by October 30 for the half-year ending September 30).
  • Content: This form provides information about the LLP’s financial position and requires the LLP to maintain proper books of accounts.
  • Initial Penalty: A late fee of ₹100 per day of delay, subject to a maximum of ₹10,000.

  3. Maintenance of Books of Accounts

  • LLPs must maintain proper books of accounts, which must be preserved for a minimum of 8 years.

  4. Appointment of Auditor

  • LLPs are not required to appoint an auditor unless their annual turnover exceeds ₹40 lakh or their contribution exceeds ₹25 lakh.

  5. Compliance with Income Tax Act

  • LLPs must file income tax returns annually, and they are subject to the same tax obligations as partnership firms.
  • Filing due date: Typically, July 31 of the assessment year (for non-audit cases).

  6. Other Filings

  • If there are any changes in the LLP (like changes in partners or registered office), Form 3 and Form 4 need to be filed with the RoC.

  7. Annual General Meeting (AGM)

  • LLPs are not required to hold an AGM, unlike companies, but partners should meet regularly to discuss business affairs.

📝 Do I need to have any prerequisite documents to start an LLP?

Yes, all partners must have DIN/DPIN. If any partner does not have one, they must obtain it before proceeding with LLP registration.

❗ My details on my documents have differences. Can I still incorporate my company using them?

You will need to ensure that all details on your documents match exactly for successful incorporation.

⏳ Why is there a delay in getting our incorporation certificate?

Increased demand for company registrations has led to stringent rules by the MCA regarding name approvals and certificate issuance. The process may take **20-25 working days** due to high volume applications.