Revanth, Manohar and Piyush are planning to set up a new business for trading of electronic goods. They have heard in business circles that many…

Revanth, Manohar and Piyush are planning to set up a new business for trading of electronic goods. They have heard in business circles that many entrepreneurs are setting up their organisations as Limited Liability Partnerships (LLPs). However, they lack knowledge about such legal structures. So, they decided to approach CA S for understanding the difference between a partnership firm, an LLP and a private company. They also want to gain the knowledge of legal provisions regarding number of partners and the paperwork involved in forming an LLP. Further, they also have doubts regarding maintenance of books of accounts and the audit requirement for such organisations. Revanth, being cost conscious, specifically asks CA S regarding requirement of audit of LLPs. During the discussion, he shares that they are expecting a turnover of 5 crores in the first year of their business and funds amounting to 50 lakhs would be brought by partners as their contribution. Manohar is concerned about the rules regarding the maintenance of accounts in software with an audit trail feature. He has a vague understanding, gained through social media, that such rules have recently come into effect. Moreover, he believes that these features are useful only for auditors. To address his concerns, CA S attempts to explain these matters to him. After resolving their doubts, they decided to constitute an LLP named Blitz Products LLP with the professional assistance of CA S, who helped them in completing the necessary paper formalities. After constituting an LLP, they acquired dealerships of few reputed companies and received a good response from market due to prominent location of their showroom and are confident of achieving their turnover expectation within the first year of business. They plan to get their accounts audited after closure of the financial year 2023-24 from CA S. The finance and accounts function of business is being headed by Piyush and he plans to contact him somewhere around August 2024 for getting audit of financial statements conducted, filing income tax return and making necessary regulatory compliances on behalf of LLP.