The deadline is here: a wake-up call for startups
Amit Rawat (name changed) is an employee-turned-entrepreneur. He registered a Limited Liability Partnership (LLP) to minimise his startup costs, so that he could put all his hard earned money into product development. Things were going pretty well for him until he got to know about certain compliances. His consultant also advised him but, due to a heavy workload, he took the advice casually and forgot about the compliances.
After some time, Amit was reminded of the consequences of nonfiling and was stunned to see the penalty – it was Rs 100 per day, per form, with no maximum limit! He looked at all sorts of ways to avoid this penalty but there was no choice but to pay. In the end, it cost him around Rs 48,300, which is a hefty price to pay for any business.
Please take the above story very seriously because it can happen to anybody and will cost you unnecessarily. Always remember that the penalty is unlimited, and it doesn’t matter whether it is one rupee or one lakh – a penalty is a penalty and it is not worth it.
The compliances for LLPs
As shown above, there are two essential forms to file, with different deadlines. Form 11 is the statement of annual return required for every LLP. This form checks the financial details of the company and needs to be filed within 60 days of the company’s fiscal year end.
Form 8 is for checking whether the LLP is liquid enough to honour all of its debts. This form is very important and reviews all the information that is contained in the LLP’s financial statements.
Apart from the above-mentioned filing, there are two other compliances required of every LLP:
- Preparation of Financial Statements: Every form of business is covered under the ambit of accounting. Proper accounting methods and principles should be followed to avoid being in default. Financial statements should be prepared in the format prescribed by authorities.
- Filing of Income Tax Return (ITR): Every LLP is required to file its ITR on or before 30th September of every year.
In closing, please be reminded to take your LLP’s compliances seriously, so that no unnecessary penalty is inccured. The deadline is fast approaching. Hence, let’s complete the process on time!
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)