LLP Compliance Post Incorporation
Post incorporation of a Limited Liability Partnership (LLP), certain compliance and procedural matters need to be completed to ensure the smooth functioning of the LLP. The overall compliance requirement for a LLP is less cumbersome, when compared to the post incorporation compliances required for a company. However, since LLP is also a separate artificial judicial person, care must be taken to ensure LLP compliances are being completed on time to avoid heavy penalty. In this article, we look at some of the major LLP Compliance performed post incorporation.
Filing LLP Agreement
The LLP Agreement governs the rights and duties of partners and the LLP. After incorporation of a LLP, LLP Agreement must be filed with the Ministry of Corporate Affairs within 30 days. LLP agreement is mandatory for all LLPs and even in the absence of a specific LLP Agreement, an LLP Agreement must be executed, specifically excluding applicability of any or all paragraphs of Schedule I (default LLP agreement).
Failure to file LLP Agreement within 30 days of incorporation of a LLP attracts a heavy penalty of Rs.100 per day of default with no ceiling on the maximum fine. Hence, care must be taken to ensure that the LLP agreement is properly executed and filed within the due-date.
- LLP Seal : LLP seal would be required for opening bank account of the company and for applying for PAN. Hence, two rubber seals – round type with LLP name and LLP name with designation can be purchased on incorporation of a LLP.
- Letterhead : LLP stationary like letterhead, invoice, official documents, etc., can be prepared with the LLP name and registered office of the LLP.
- Book of Accounts : LLPs are required to maintain proper book of accounts on cash or accrual basis. Book of accounts for a LLP can be maintained manually with the register kept at the registered office or electronically through accounting softwares like Tally or Quickbooks.
LLP PAN Application
Post incorporation of a LLP, PAN card for the LLP can be applied for online. PAN application (Form 49A) is used for applying for PAN for LLP. Once, an application is submitted online, the PAN acknowledgement must be signed and sealed by a Designated Partner of the LLP. The signed application must then be couriered to the NSDL office for issue of PAN card. The PAN card of the LLP will be sent to the registered office address of the LLP in 10 – 20 working days.
LLP Bank Account Opening
Bank account for a LLP can be opened easily, as it is considered to be a corporate entity. The following documents of the LLP must be submitted for opening of LLP bank account:
- Copy of the LLP agreement
- Copy of the Incorporation document and DPIN of the designated partners
- Copy of the LLP Registration Certificate issued by the ROC
- Copy of LLP-IN issued by the ROC
- Copy of the Resolution to open a bank account
- List of authorized person/s with the specimen signatures to operate the account duly attested by Designated Partners
- Copy of PAN allotment letter
All documents must be signed by a Designated Partner and must have the seal of the LLP.
There is no concept of appointment of auditor in a LLP, as there is no requirement for audit of the book of accounts of a LLP unless turnover exceeds Rs.40 lakhs or capital contribution exceeds Rs.25 lakhs.
Filing LLP Annual Return
LLPs in India must file its Annual Return within 60 days from the end of close of financial year and Statement of Account & Solvency within 30 days from end of six months of close of financial year. Unlike Companies, LLPs mandatorily have to maintain their financial year, as April 1st to March 31st. Therefore, LLP annual return is due on May 30th and the Statement of Account & Solvency is due on October 30th of each financial year. Care must be taken again to ensure LLP Annual Return is filed on time, as non-compliance attracts a penalty of Rs.100 per day of default with no ceiling. Know more about filing LLP annual return.