Why Are Annual Compliance Filings For LLPs, So Important?
Annual compliance filings are vital to LLPs, as entities that don't comply can be fined up to Rs. 5 lakh.
What are Annual Filings? (Overview)
Limited liability partnerships (LLPs) are required to meet fewer criteria for compliance on filing annual returns, in comparison to private limited companies. LLPs are required to provide information related to the statement of accounts, and returns, on an annual basis. Penalties, however, are huge for failure to comply. Entities that don’t provide the requisite information are fined heavily, with penalties that can go up to Rs. 5 lakhs..
What Are The Benefits of Filing Annual Compliances For LLPs
- Higher Credibility: Annual compliance provides for higher credibility to the organization for loan approvals or any other similar requirements.
- Record of Financial Worth: Annual compliance filings by LLP’s provide records to other companies regarding their financial worth, which may result in new and interested investors.
- Stays Active and No Penalties: With regular filings, LLPs are not declared as defunct, and stays active. Also, annual compliance filings are mandatory and hence involve penalties (additional fees) to LLPs, when they default on filings.
- Conversion or Closure: Regular annual compliance filings facilitate easier conversion of Limited Liability Partnerships into other types of companies, as well as quicker resolutions in case of dissolution of partnerships.
What are the Checklist items for Filing of Annual Compliance?
- Annual returns need to be filed with the Registrar of Companies.
- Annual returns to be filed as per the prescribed format of LLP Form 11.
- This is required to be filed within 60 days from the close of the financial year, or the 30th of May of each year.
- The LLP annual compliance has to be met by each and every registered LLP even if there is no business activity. In fact, it has to be met even if the LLP has been closed down and whether or not a business bank account exists.
What Are The Important Requirements of Filing Annual Compliance?
For businesses to meet their annual compliance requirements, all it requires is for them to remain disciplined and vigilant. However, being callous can result in hefty fines and penalties. No to mention, LLPs that meet annual compliance requirements are often granted loans quicker or readily funded by investors, as these businesses are compliant with the requirements of the Registrar of Companies (RoC).
Regular Updates From The RoC (Registrar Of Companies)
With an on-call company secretary throughout the year, you can ensure that your business is run in accordance with the laws in force. Our team would keep you up-to-date on all the changes made by the RoC, throughout the year.
What are the Documents Required Filing of Annual Compliance?
Form 8 must be filed within 30 days from the end of 6 months of the financial year. It is then digitally signed by two designated partners and it must be certified by a chartered accountant/company secretary/cost accountant. Form 8 has two parts:
- Part A – Statement of Solvency
- Part B – Statement of Accounts, Statement of Income & Expenditure
The penalty for not filing this form would be Rs. 100 per day until it is compiled.
Form 11 contains details of the number of partners, total number of partners, total contribution received by all partners, details of body corporate as partners and summary of partners. All LLPs should file this form within 60 days from the closure of the financial year with the prescribed fee. Hence, the due date for filing LLP Form 11 is 30th of May each year.
An LLP cannot be wound up or closed until all the annual returns are filed. Hence, it is important to file LLP Annual Return on or before the due date to avoid penalties.
Note:All the documents need to be either in Malay or English Language.
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