LLP Compliance

What is LLP compliance?

Every Limited Liability Partnership registered in India has to file an annual return and a statement of accounts and solvency with the Registrar each year, under the LLP Act, 2008. It also has to report changes to its partners or its LLP agreement as they happen.

An LLP's compliance is lighter than a company's — no AGM, and no audit below the threshold — but it isn't optional. Both annual forms are due whether or not the LLP did any business, and the late fees have no upper limit.

The forms and people involved

Two annual forms make up most of an LLP's compliance, with fixed dates that don't depend on any meeting:

Financial year

Every LLP follows an April-to-March financial year. Both annual forms relate to that year's accounts and the LLP's position at 31 March.

Form 11 — Annual Return

Lists the LLP's partners, their contributions, and any changes during the year. Due within 60 days of the year end, so by 30 May.

Form 8 — Statement of Account & Solvency

Part A is the designated partners' declaration that the LLP can pay its debts; Part B is the statement of accounts. Due by 30 October.

Designated partners

Every LLP needs at least two, one of them resident in India. They sign the annual forms and are the ones answerable if filings are missed.

Audit threshold

An LLP's accounts must be audited only if its turnover exceeds ₹40 lakh or its partners' contribution exceeds ₹25 lakh in the year.

DIR-3 KYC

Every designated partner's DPIN (their DIN) needs KYC when it falls due. A missed KYC deactivates it until filed with a ₹5,000 fee.

Additional fees

Late Form 8 and Form 11 filings attract ₹100 per day, per form, with no upper limit.

Why filing on time matters

LLPs are easy to neglect precisely because there's no AGM to prompt anyone. The cost of that builds every day a form is late:

Late fees with no cap

₹100 per day, per form, with no upper limit. For a small LLP, a couple of years of missed filings can cost more than the business earned in profit.

Penalties on designated partners

On top of the fees, the Registrar can levy penalties on the LLP and on each designated partner for failing to file its accounts or annual return.

Strike-off

The Registrar can strike off an LLP that isn't carrying on business and hasn't filed. Its bank account is frozen, and restoring it is slow and expensive.

Keeping limited liability meaningful

Limited liability rests on the LLP being a properly maintained separate entity. Years of missing records weaken that position if a creditor or dispute arises.

Loans, tenders, and clients

Banks, government tenders, and larger clients ask for filed accounts and a clean MCA record before they'll deal with an LLP.

Converting or raising funds later

Converting the LLP into a company, or bringing in new partners, needs the compliance record to be up to date first.

Active status on the MCA register

The MCA master data shows whether an LLP is active and when it last filed. Clients and vendors increasingly check it.

Who has to file?

• Every registered LLP, whether or not it did any business or made a profit during the year
• Professional firms — CAs, architects, consultants, and agencies — that run as LLPs
• LLPs registered during the year, which file from their first financial year
• LLPs that have fallen behind on past years and need to catch up before a loan, conversion, or closure
• LLPs adding or removing partners, or changing their agreement, which need event-based filings too

If the LLP has genuinely stopped doing business, closing it is usually cheaper than keeping it on the register and filing late year after year.

LLP vs. Private Limited vs. partnership firm

Lighter compliance is one of the main reasons founders choose an LLP. Here's how its ongoing obligations compare:

What we'll need from you

Books of account

Bank statements, invoices, and expense records for the full year, kept on a double-entry basis as the LLP Rules require.

Statement of accounts

Balance sheet and income and expenditure statement, audited if the LLP is over the threshold, or certified by a practising professional if not.

Partner details

Each partner's contribution, and any partner who joined, left, or changed designation during the year.

Solvency information

Enough about the LLP's assets and liabilities for the designated partners to declare, in good faith, that it can pay its debts.

LLP agreement

The current agreement, and any amendments, so the filings match how the LLP is actually structured.

Active DSCs

Valid digital signatures for two designated partners. An expired DSC is the most common reason a filing slips past the deadline.

The Registrar's own filing fee for each form is small and depends on the partners' total contribution. It only becomes significant when forms are filed late.

Filing process

The annual cycle runs across two deadlines, five months apart. Here's how a year usually goes:

1. 1

   Confirm partners and contributions

   We check the partner details and contributions as at 31 March against the LLP agreement and the MCA record.

2. 2

   File Form 11 by 30 May

   The annual return goes first. It doesn't need the accounts, so there's no reason to let it run late.

3. 3

   Finalise the accounts

   The books for the year are closed and reconciled with the bank and GST records, and the statement of accounts is prepared.

4. 4

   Audit, if the LLP crosses the threshold

   An LLP above ₹40 lakh turnover or ₹25 lakh contribution has its accounts audited. Below it, a practising professional certifies them.

5. 5

   File Form 8 by 30 October

   The statement of account and solvency is signed by two designated partners, certified, and filed on the MCA portal.

6. 6

   File the income-tax return

   The same accounts are used for the LLP's return (ITR-5) with the Income Tax Department. Each MCA filing generates an SRN to keep on record.

Changes that need filing during the year

The annual forms aren't the only obligation. These are filed as and when things change, most within 30 days:

Form 3 — LLP agreement

Filed within 30 days of incorporation, and again within 30 days of any change to the agreement, such as profit shares or contributions.

Form 4 — partner changes

Filed within 30 days when a partner joins, leaves, or becomes or stops being a designated partner.

Change of registered office

Moving the LLP's registered office needs its own filing with the Registrar, and a move to another state has additional steps.

Change of name

A new name has to be reserved and approved before the LLP's name can be changed on the register.

Designated partner KYC

Each designated partner's KYC must stay current. Their DPIN is deactivated if it lapses, which blocks them from signing any filing.

Closing the LLP

An LLP that's stopped trading can apply to be struck off once its filings are up to date, instead of accumulating late fees.

Benefits and responsibilities