Financial Disclosure and Winding Up of LLP
1. INTRODUCTION
An LLP is a separate legal entity.
Therefore:
It delays with public money (creditors, banks, clients)
It enjoys limited liability protection
It gets tax benefits
Because of these advantages, law imposes responsibilities.
Mainly:
Financial transparency
Disclosure
Proper closure when business ends
This chapter delas with:
Life after incorporation
Financial accountability
End of LLP (closure)
2. MEANING OF FINANCIAL DISCLOSURE OF LLP
What is Financial Disclosure?
Financial disclosure means legally revealing the true financial
position of LLP to the government and stakeholders.
It includes:
1. Maintaining books of accounts
2. Preparing financial statements
3. Declaring solvency
4. Filing statements with ROC
Why Financial Disclosure is compulsory?
Because LLP enjoys:
Limited liability
Separate legal identity
So law wants to ensure:
Creditors are protected
Partners do not misuse LLP form
Government can monitor compliance
Fraud and money laundering are prevented
Books of Account
Every LLP must maintain books showing:
Assets (cash, building, machinery)
Liabilities (loan, creditors)
Income
Expenses
System of Accounting:
Cash Basis
, Accrual Basis
Double Entry System compulsory
Place of Keeping Books
Books must be kept:
At registered office, OR
At any other place decided by partners
But ROC must be informed if books kept elsewhere.
Period of Preservation
Books must be preserved for 8 years.
Purpose:
Income tax scrutiny
Investigation
Dispute resolution
Statement of Account and Solvency
Every LLP must prepare Statement of Account & Solvency whach
has two parts:
PART 1 – Statement of Accounts
Shows:
Assets
Liabilities
Income
Expenses
PART 2 – Solvency Declaration
Partners declare:
“LLP is capable of paying its debts in the normal course of
business”.
This declaration must be:
Signed by designated partners
True and honest
False declaration = criminal liability
Filing with ROC
Form used: Form 8
Time limit:
o Within 30 days from 6 months of end of financial year.
o Financial year ends: 31st March
o Last date: 30th October
o Example:-- ABC LLP FY ends on 31st March 2025.
Statement of Account prepared by 30 th
September.
Filed with ROC by 30 th October 2025
Audit of LLP
Audit is NOT mandatory for all LLPs
1. INTRODUCTION
An LLP is a separate legal entity.
Therefore:
It delays with public money (creditors, banks, clients)
It enjoys limited liability protection
It gets tax benefits
Because of these advantages, law imposes responsibilities.
Mainly:
Financial transparency
Disclosure
Proper closure when business ends
This chapter delas with:
Life after incorporation
Financial accountability
End of LLP (closure)
2. MEANING OF FINANCIAL DISCLOSURE OF LLP
What is Financial Disclosure?
Financial disclosure means legally revealing the true financial
position of LLP to the government and stakeholders.
It includes:
1. Maintaining books of accounts
2. Preparing financial statements
3. Declaring solvency
4. Filing statements with ROC
Why Financial Disclosure is compulsory?
Because LLP enjoys:
Limited liability
Separate legal identity
So law wants to ensure:
Creditors are protected
Partners do not misuse LLP form
Government can monitor compliance
Fraud and money laundering are prevented
Books of Account
Every LLP must maintain books showing:
Assets (cash, building, machinery)
Liabilities (loan, creditors)
Income
Expenses
System of Accounting:
Cash Basis
, Accrual Basis
Double Entry System compulsory
Place of Keeping Books
Books must be kept:
At registered office, OR
At any other place decided by partners
But ROC must be informed if books kept elsewhere.
Period of Preservation
Books must be preserved for 8 years.
Purpose:
Income tax scrutiny
Investigation
Dispute resolution
Statement of Account and Solvency
Every LLP must prepare Statement of Account & Solvency whach
has two parts:
PART 1 – Statement of Accounts
Shows:
Assets
Liabilities
Income
Expenses
PART 2 – Solvency Declaration
Partners declare:
“LLP is capable of paying its debts in the normal course of
business”.
This declaration must be:
Signed by designated partners
True and honest
False declaration = criminal liability
Filing with ROC
Form used: Form 8
Time limit:
o Within 30 days from 6 months of end of financial year.
o Financial year ends: 31st March
o Last date: 30th October
o Example:-- ABC LLP FY ends on 31st March 2025.
Statement of Account prepared by 30 th
September.
Filed with ROC by 30 th October 2025
Audit of LLP
Audit is NOT mandatory for all LLPs
