10 Things to Do After LLP Registration in India (Post Incorporation Compliances)
Congratulations on registering your LLP (Limited Liability Partnership) in India! While this is an exciting milestone, it’s just the beginning. The Post Incorporation LLP Compliance steps you take after registration are crucial for setting up your business for success and ensuring compliance with legal requirements. So, what’s next? Let’s dive into the essential actions you need to take to get your LLP off to a strong start. Simply registering your LLP is just the first step. To ensure your business operates smoothly and complies with all regulations, there are several critical actions you must take. Don’t worry—we’ll explain everything in simple words. Here’s a detailed guide with 10 key steps to take for LLP compliance after incorporation. Follow these steps to ensure your business starts on the right track.
1. Prepare the LLP Agreement
The LLP Agreement is like a rulebook for your business. It clearly states the roles and responsibilities of each partner, how profits will be divided, and what to do in case of disagreements. Preparing this agreement is a mandatory step, and you must:
- Draft the LLP Agreement on stamp paper (the value depends on the rules of your state; for example, in Maharashtra, the stamp duty starts at ₹500 but varies based on the capital contribution).
- Have all the partners sign it.
- Submit it to the Registrar of Companies within 30 days of your LLP’s incorporation.
Why it’s important: Without submitting the LLP Agreement, you may face a penalty of ₹100 per day until it is filed. This small step helps you avoid unnecessary fines and ensures clarity in business operations. A well-drafted LLP Agreement can also prevent misunderstandings and conflicts in the future.
2. Get a PAN and TAN
Your LLP needs a Permanent Account Number (PAN) to file taxes and a Tax Deduction Account Number (TAN) if you plan to deduct tax at the source. A PAN serves as a unique identifier for your business to track income and tax payments, while TAN is essential for complying with tax deduction regulations. Together, these ensure that your LLP adheres to tax obligations effectively. Both of these numbers serve as essential identifiers for your business. To get these:
- Apply online through the official government portal or engage a consultant to do it for you.
- Ensure your LLP’s Certificate of Incorporation and other documents are handy for the application process.
Why it’s important: Without a PAN, your LLP cannot file income tax returns or fulfill other tax-related obligations. Similarly, TAN is essential if you have employees or make payments that require tax deduction. Obtaining these numbers is simple but crucial for meeting all tax-related requirements.
3. Open a Bank Account
One of Post Incorporation LLP Compliance is, Every LLP must have a dedicated bank account for its business transactions. To open a bank account, gather the following documents:
- Certificate of Incorporation.
- PAN card of the LLP.
- LLP Agreement.
- Identity and address proofs of all partners.
Pro Tip: Choose a bank that offers excellent online banking facilities and business-friendly services to simplify financial management. Setting up multiple accounts for different purposes, like daily operations and tax payments, can also help in managing finances effectively.
4. Register for GST (If Needed)
Goods and Services Tax (GST) registration is mandatory for LLPs that exceed a certain turnover threshold:
- ₹20 lakhs for service providers.
- ₹40 lakhs for businesses dealing in goods. Even if your turnover is below this limit, voluntary GST registration can be beneficial. It allows you to claim input tax credits and work seamlessly with clients who require GST-compliant invoices.
Why it’s important: Without GST registration, you cannot legally collect GST from customers or claim tax credits, which may affect your business’s credibility and financial efficiency. GST compliance also makes your business appear more professional and trustworthy to clients and suppliers.
5. Keep Important Records
Maintaining proper records is a legal requirement and essential for your LLP’s growth. These records include:
- A list of all partners and their contributions.
- Minutes of meetings held between partners.
- Accurate financial records, such as income, expenses, and bank statements.
Tip: Use accounting software or hire a bookkeeper to ensure all records are updated and well-organized. This will make audits and tax filings much easier. Regularly reviewing these records can also provide valuable insights into your business’s performance and help in decision-making.
6. File Annual Returns
Compliance is key to running a successful LLP. Every year, you must file the following:
- Form 11 (Annual Return): File within 60 days after the end of the financial year.
- Form 8 (Statement of Accounts and Solvency): File by October 30 every year.
- Income Tax Return: File by July 31 or September 30 if your accounts require an audit.
Why it’s important: Timely filing helps you avoid penalties and maintain a good compliance record, which is crucial for the reputation and smooth functioning of your LLP. Staying compliant not only keeps your business legal but also enhances its credibility when dealing with clients and stakeholders.
7. Get Other Licenses (If Needed)
Your business might need specific licenses based on the type of services or products you offer. Common licenses include:
- Import Export Code (IEC): Essential for businesses involved in import or export activities. Without this code, you cannot legally engage in cross-border trade.
- FSSAI License: Mandatory for businesses dealing with food products to ensure food safety and compliance with regulations.
- Professional Tax Registration: Required in certain states for businesses and professionals. This is a state-level tax applicable to employees, business owners, and professionals.
Tip: Research industry-specific licenses to ensure your LLP operates legally. A compliance consultant can guide you through the process and help you identify the licenses specific to your state or industry.
8. Capital Contribution Compliance
Partners need to contribute the capital they agreed upon during LLP registration. Ensure that the capital contributions are:
- Deposited into the LLP’s bank account.
- Properly recorded in the LLP’s books of accounts.
Why it’s important: Accurate records of capital contributions help in resolving disputes and showcase the financial strength of your LLP when dealing with banks or investors.
9. Applicability of Audit
Not all LLPs require an audit, but you must conduct one if:
- Your annual turnover exceeds ₹40 lakhs.
- Your contribution exceeds ₹25 lakhs.
Why it’s important: Conducting an audit ensures financial transparency and compliance with the law. It also builds trust with stakeholders, clients, and financial institutions.
10. Follow Labour Laws (If You Have Employees)
If your LLP employs staff, you need to comply with various labor laws to ensure their welfare. Key steps include:
- Registering for Employee Provident Fund (EPF) and Employee State Insurance (ESI).
- Paying salaries as per minimum wage laws.
- Providing a safe and secure work environment.
Why it’s important: Following these laws protects your employees and safeguards your business from legal issues or penalties. Compliance with labor laws also helps in building a positive reputation as an ethical employer.
11. Create a Brand for Your Business
A strong brand identity helps your business stand out. Here’s how you can build one:
- Design a professional logo that represents your business values.
- Develop a website to showcase your services and attract potential clients.
- Set up social media accounts to connect with a wider audience and promote your business.
- List your business on platforms like Google My Business to improve online visibility.
Pro Tip: Consistency in branding across all platforms builds trust and recognition among customers. Engaging with your audience through regular updates and promotions can further enhance your brand’s reach.
12. Set Up Accounting and Payroll
Proper financial management is crucial for any business. To simplify this process:
- Use accounting software to create invoices, track expenses, and file taxes.
- If you have employees, set up a payroll system to calculate salaries, tax deductions, and other benefits.
Tip: Hire a professional accountant if managing finances feels overwhelming. This investment will save you time and ensure accuracy. Proper accounting not only ensures compliance but also provides insights into your financial health, helping you plan for future growth.
Final Thoughts – Post Incorporation LLP Compliance
Starting an LLP is just the beginning of an exciting journey. However, it comes with its set of responsibilities. By following these steps, you can ensure full Post Incorporation LLP Compliance with regulations, establish a strong and reliable foundation for your LLP, and set your business on the path to long-term success. Remember, thorough preparation and attention to detail now can save you time, money, and headaches later. Keep this guide handy as a reference to help you stay on track and make informed decisions as your business grows.
If you need professional assistance with Post Incorporation LLP Compliance or want expert advice, Infinity Compliance is here to help. We’ll handle the paperwork while you focus on growing your business. Contact us today to make your LLP journey stress-free!
