Wish to close your LLP, here is a list of 3 important rules for LLP strike off that you should keep in mind

What does LLP strike off mean?

If your LLP isn’t running any business anymore and you want to officially close it, you apply for an LLP strike-off. This means your LLP’s name will be removed from the government’s official list, and the LLP will legally stop existing.

Key Points to Understand:

• Voluntary Closure: If your LLP hasn’t done any business or work for at least one year, the partners can choose to close it voluntarily. To do this, you need to file a form called e-Form 24 with the Registrar of Companies (ROC). This is based on specific government rules that allow you to close your LLP if it’s inactive.
• Compulsory Strike-Off: Sometimes, the government itself can decide to close your LLP. This happens if your LLP hasn’t done any business for two years or more, or if you’ve not filed the required yearly documents. The ROC has the power to remove your LLP from the records in such cases.

What Happens After Strike-Off? Once your LLP is officially struck off (closed), it legally stops existing. But it’s important to know that the partners may still be responsible for any unpaid debts or issues, even after the LLP is closed.

Rules and Regulations: The whole process and rules for closing an LLP are set by laws under the LLP Act and related rules. For more detailed info, you can always check the official Ministry of Corporate Affairs (MCA) website about LLP closure.

When Can You Apply for LLP Strike-Off?

You can only apply to close your LLP if it hasn’t done any business or trading for at least one year. The government wants to make sure there are no unpaid taxes or legal problems before your LLP is closed.

What Are the 3 Important Rules You Must Follow for LLP Strike-Off?

If you’re thinking about closing your LLP, it’s important to follow the rules set by the Ministry of Corporate Affairs (MCA). Not doing so can cause delays or even get your application rejected. Here are the three main things you need to keep in mind:

1. Make sure your LLP has been inactive for at least one year: Your LLP should not have done any business or trading for at least one whole year before you apply for strike-off.
2. Submit all pending documents: If you haven’t filed important forms like Form 8 (which shows your LLP’s financial status) or Form 11 (the annual return), you need to submit these for the last year your LLP was active.
3. File Form 24 with the right documents: To start the strike-off process, you have to file Form 24 with the Registrar of Companies (ROC). Along with this form, you need to provide:
   • A statement from a Chartered Accountant showing that your LLP has no assets or debts.
   • A signed affidavit from all partners confirming that the LLP has stopped business, has no pending debts, all bank accounts are closed, and all income tax returns are filed.
   • A copy of the latest income tax return, if applicable.

How to File for LLP Strike-Off?

1. Step 1: Ensure Eligibility for Strike-Off: Before applying, confirm that the LLP is eligible for strike-off. The LLP should have no business activity or operations for at least one year, and all financial statements and ROC filings must be up-to-date.
2. Step 2: Settle All Pending Dues and Liabilities: Clear all outstanding dues, including ROC filing fees, tax dues, and liabilities towards creditors. The LLP should have no debts, as the ROC requires a declaration of no pending liabilities.
3. Step 3: Close Bank Accounts: The LLP must close all its bank accounts before applying for strike-off. Obtain a closure letter or certificate from the bank as proof of account closure.
4. Step 4: Obtain Partners’ Consent: All designated partners must agree to the closure of the LLP. A resolution for strike-off must be passed and recorded in the LLP’s official records.
5. Step 5: Prepare Affidavit and Indemnity Bond: Each partner must sign an affidavit and indemnity bond stating that the LLP has no liabilities and will indemnify any future claims. These documents must be notarized.
6. Step 6: Draft Statement of Accounts: Prepare a statement of accounts showing zero assets and liabilities, certified by a practicing Chartered Accountant. The statement should not be older than 30 days from the date of application.
7. Step 7: File Form 24 on MCA Portal: Log in to the Ministry of Corporate Affairs (MCA) portal and file Form 24, which is the official application for strike-off. Attach all required documents, including affidavits, indemnity bonds, and financial statements.
8. Step 8: Pay the Government Fees: After uploading Form 24, pay the prescribed government fees online. This completes the submission process for the strike-off application.
9. Step 9: ROC Review and Verification: The ROC will review the application, verify documents, and may request additional information if needed. If everything is in order, the ROC will process the strike-off.
10. Step 10: Receipt of Strike-Off Order: Once approved, the ROC will issue a strike-off order and publish a notice in the official gazette. The LLP will then be officially dissolved.

What Are the Benefits of LLP Strike-Off?

• You Avoid Ongoing Penalties: The government charges a late fee of ₹100 per day for missing mandatory filings like Form 8 and Form 11. By closing your LLP, you stop these penalties from piling up.
• You Reduce Annual Compliance Costs: Even if your LLP doesn’t operate, you’re required to file annual returns. Striking off your LLP, frees you from the yearly expenses related to accounting, audits, and filing mandatory compliance documents.
• You Close the Entity Legally: Many people assume, they can just stop operating without formally closing their LLP. That’s risky. Strike-off ends your responsibility lawfully.
• You Protect Your Name and Identity: Leaving an LLP open without activity may invite misuse or fraud. Once you strike it off, no one else can use its name or identity.
• You Make Future Business Easier: If you ever plan to start a new business or LLP, you’ll need a clean record. A properly closed LLP strengthens your compliance history and credibility.
• You Prevent Legal Notices and Government Action: The Registrar of Companies (ROC) regularly reviews an inactive LLPs. If you don’t strike off, you may receive legal notices or face forced strike-off with penalties.
• You Show Professional Responsibility: Closing your LLP the right way, reflects professionalism. It shows that you take your legal duties seriously, which builds trust with partners, investors, and even government bodies.

What Happens If You Don’t Strike Off Your LLP?

If you stop running your LLP but don’t close it properly, it still legally exists. This means you’re still responsible for things like filing annual returns, even if the business isn’t active. If you miss these filings, you’ll have to pay a penalty of ₹100 every day, which can add up quickly.

Over time, the Registrar of Companies (ROC) may send you notices or even take legal action against your LLP. Plus, you might get banned from starting or managing other businesses in the future.

So, instead of leaving your LLP inactive and risking these problems, it’s much better to officially close it by striking it off. This way, you can end things cleanly and avoid any trouble down the road.

What Challenges You Might Face During LLP Strike-Off?

While striking off an LLP may seem simple on the surface, there can be a few roadblocks along the way. These challenges usually pop up when key steps are missed or documents are not in order. Here’s what you might run into:

• Missing or Delayed Compliance Filings: If your LLP hasn’t filed Form 8 or Form 11 for previous years, you’ll need to clear those first. Many strike-off applications get rejected because of the past filings being incomplete.
• Unlock Bank Accounts: A lot of applicants forget to formally close their LLP’s bank account. You’ll need an official closure letter from the bank, or your application won’t move forward.
• Unpaid Dues or Taxes: If the LLP has any pending dues; like GST, TDS, or income tax; it won’t be eligible for strike-off until everything is cleared.
• Incorrect or Incomplete Documents: If your paperwork has Wrong information, Missing signatures, or old financial details, your application could get delayed or even rejected.
• Objections from Others: After you apply, the government (Registrar of Companies) puts out a public notice about your LLP closure. If someone like a creditor, bank, or tax department objects because they think you owe money or skipped something, the process could get stuck or denied.
• Digital Signature Issues: Form 24 has to be digitally signed by one of the partners using a valid Digital Signature Certificate (DSC). If your DSC is expired or not working, the system won’t let you submit the form.
• Not Knowing the Steps: Let’s be honest; legal processes can be a bit confusing. A lot of people delay their application or make errors simply because they’re unsure about what exactly needs to be done and in what order.

Tip: If you’re ever unsure, it’s totally okay to ask a professional for help.

How Long Does the LLP Strike-Off Process Take?

The time it takes to strike off an LLP depends on how ready you are with documents and how quickly the authorities process your application. On average, the whole process takes about 2 to 3 months from the date of filing Form 24.

Conclusion

Closing your LLP by striking it off is an important step when your business is no longer active. It helps you avoid unnecessary penalties, ongoing compliance costs, and potential legal headaches. By following the right rules, preparing the necessary documents, and filing the correct forms, you can wrap up the process smoothly. Doing it properly not only clears your record but also keeps your future business plans hassle-free. And if you ever feel unsure along the way, getting advice from a professional can make everything easier and quicker. Taking care of your LLP closure responsibly is a smart move for any business owner.

Suggested Read :

Exemption on Filing LLP Form 8

Purpose Form 8 LLP

LLP Form 8 Filing and Due dates

Importance of an LLP Certificate

LLP agreement vs Partnership Deed

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