As per a report by the Ministry of Corporate Affairs, as many as 60,084 One Person Companies were actively functioning till the 31st of August, 2024. On the other hand, you could find as many as 58,990 Limited Liability Partnerships were incorporated as of March 31st, 2024.
However, the Ministry of Corporate Affairs struck 920 LLPs and some more OPCs off the list. While there can be many reasons for the same, one of them is not engaging in Annual Compliance Filing for OPC or Annual Filing for LLP.
So, if you’re a new business owner setting up a One Person Company or Limited Liability Partnership, and wish to know how to fulfill the annual compliance requirements, continue reading for more information.
What are OPCs?
OPCs are One Person Companies that are set up and managed by single individuals. This was made possible due to Section 2(62) of The Companies Act 2013. Previously, setting up a private company required a minimum of two members and two directors.
On the other hand, setting up a public company requires a minimum of seven members and three directors.
Under the rules of The Companies Act 2013, One Person Companies enjoy all the features of a company, such as perpetual succession, being recognized as an independent company, and limited liability.
Importance of Filing Annual Compliance for OPCs
While you might question the importance of filing compliance for your One Person Company, there are quite a few advantages that you can enjoy when you do so.
Some of them include:
- Following the requirements mentioned in The Companies Act 2013
- Proving that you run your company fairly and honestly
- Avoiding being struck off the list
- Ensuring the continued protection of your limited liability
- Maintaining the trust and credibility that you have with your investors, shareholders and banks
Requirements to Carry Out Annual Compliance Filing for OPC
You need to ensure that you fulfill the following requirements to be eligible to carry out Annual Compliance Filing for OPC:
- File an AOC-4 and MGT-7 Form with the Registrar of Companies six months after the end of the current financial year
- Maintain updated files that contain GST-related data
- Staying compliant with the Provident Fund or Employees’ State Insurance and Tax Deducted at Source rules
- Schedule a Board Meeting every three months
- Maintain an updated record of all your employees, inclusive of directors
- File separate DIR-3 KYC forms for all the directors in your firm by the 31st of July, every year
- Submit or file an MBP-1 form at the end of the financial year, annually.
- Hire an active CA who will act as your Auditor
- File your Income Tax or I-T Returns by the 30th of September, every financial year
You will also need to have the following documents to be eligible to carry out Annual Compliance Filing for OPC:
- A list of all the business activities carried out by your OPC for the duration of the financial year
- Your Corporate Identification Number, PAN Card and the Registered Office Address
- The directors’ contact information, shareholding information, director identification number, confirmation report stating that the company has complied with the Companies Act, 2013, a statement confirming the accuracy of your OPC’s financial statements
- A list of all the securities owned by your OPC
- Summary of your OPC’s expenses, losses and profits
- A list of long term debentures and share issued by your OPC
- Cash inflow and outflow reports
- Stating your OPC’s dates for the financial year
- A report by an independent auditor stating the accuracy of the financial statements generated by the company
- I-T Returns Form along with the audited Profit and Loss, and Balance sheets
What are LLPs?
LLPs refer to Limited Liability Partnership companies wherein all or some of the partners in the company have a certain amount of liability. In other words, each partner is liable or responsible for the aspects of the company they handle, or shares they own.
If you wish to incorporate or register an LLP, you must obey all the regulations of the LLP Act of 2008.
LLP companies are different from OPCs in that they enjoy the features of a partnership, as both LLPs and OPCs enjoy limited liability protection.
Importance of Fulling Compliance Requirements for Annual Filing for LLP
We would recommend that you remember to annual compliance for your LLPs to enjoy the following advantages:
- Maintaining your credibility with your shareholders, investors and bank officials
- Ensuring that you stay compliant with the LLP Act of 2008
- Avoiding penalties
- Enjoying tax benefits through deductions, wherever applicable
- Creating a stable foundation for your company’s growth
- Increasing your chances for receiving funding from investors
Requirements to Carry Out Annual Filing for LLP
You will need to fulfil the following requirements to eligible to proceed with the Annual Filing for LLP:
- File an Income Tax or I-T Return-5 Form which will contain information about your tax liabilities, financial transactions, and LLP revenue.
- Get your financial statement audited by an independent Chartered Accountant. Remember, you should do this only if the annual turnover of your LLP is more than forty lakhs or if your LLP contributes a capital more than twenty-five lakhs.
- File a Form 11, which will contain details like your LLP’s number of partners, structure fo your company, and changes in management.
- Maintain proper financial records stating your liabilities, expenses, income and assets
- File a Form 8, which states whether your LLP is financially solvent and the assets and liabilities owned by the company.
- File your GST Returns
You will also need to have the following documents before you proceed with the Annual Filing for LLP:
- GST Return reports
- Form 11
- Agreement of your LLP
- Details of your partners
- I-T Return-5 Form
- Bank statements
- Tax Deducted at Source returns
- Audit Reports
Concluding Remarks
As you can see, it is quite important to remember about Annual Filing for LLP and Annual Compliance Filing for OPC since you can secure the future of your company. That’s because you will otherwise risk being struck off the list and possible loss of reputation.
So do read all the terms and conditions mentioned in the sections above to successfully file your annual compliance for your LLP or OPC.
