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Limited Liability Partnership Registration
Overview
This is the second most popular (after private limited) and preferred form of entity, highly recommended for Startups, New Businesses and Closely Held business groups. Other than that, setting up a Limited Liability Partnership firm is very pocket friendly for budding entrepreneurs and small business owners.
LLP, an acronym for Limited Liability Partnership, is a body corporate, and a legal entity, separate from its partners. It is a combination of both, a traditional partnership firm, as well as a corporate. Hence, it is known as a Hybrid. It is governed under the Limited Liability Partnership Act, 2008, which came into effect on 1st April, 2009. LLPs in India are governed by Ministry of Corporate Affairs.
As the name suggests, the partners in an LLP have limited liability in the firm, i. e. If the firm is at risk for debts, the personal assets of the partners would not be used to clear off the risks. In simple words, an LLP is a partnership, wherein the partners come together and put their skills and talents to run the business, share the profits and losses of the business, and also having limited liability. Every LLP must have at least 2 designated partners, one of them being a resident of India.
Features of Limited Liability Partnership
MembersA minimum of 2 members are required for the formation of LLP and at least two must be designated partners for the firm and maximum number of members in LLP can be unlimited.LiabilityThe liability of all the partners of an LLP is limited. It means that if the firm is at risk for debts, then the personal assets of the partners would not be at risk for clearing off the debts, except under certain circumstances.HybridAn LLP is considered as a hybrid. It is a combination of both, a partnership as well as a private limited company.Separate Legal EntityUnlike Partnership, LLP is a separate legal entity, separate from its partner. It is separate from the partners of the firm, has its own name, and also can own any assets under the firm’s name itself.Perpetual SuccessionAny change in the partner will not affect the rights, the rules & regulations, or the liabilities of the LLP. In case of death of partners, their nominees take place as partners. Hence, an LLP has perpetual succession.Benefits of LLP registration
Limited Liability of PartnersBecause LLP can enter into a contractual relationship in its own capacity, it offers a great advantage to the partners for limiting their personal risk. Liability of financial contribution of any partner is restricted to the capital contribution as per the LLP agreement. Many new age businesses prefer LLP registration over partnership so that their personal assets remain safe in case of loss, or even insolvency. Further, one partner is not held responsible for the actions of negligence or misconduct of any other partner.Separate Legal ExistenceRegistration of LLP creates a separate legal identity than its partners. Governed by the LLP Act of 2008, it allows the business to contract with other entities, take legal action, own assets and borrow funds in the name of an LLP itself. It is a major advantage that is not available to a regular partnership firmOperational FlexibilityLLP Agreement, deed among partners of an LLP, clarifies operating structure including rights and responsibilities of the partners. Typically, LLP would select a “Designated Member” who would control day-to-day operations. It can have individuals or existing businesses as members. Further, this structure allows to clearly define roles of the partners and their respective responsibilities. It could also help in protecting partner’s interest in case of loss because of an unlawful act of any other partner.Lower Compliance RequirementA key benefit of registering LLP over a private company is lesser compliance requirement. It doesn’t have a mandatory audit requirement until a certain level of turnover or contribution. Unlike companies, compliances related to board meetings, statutory meetings, etc. do not apply to LLPs. Professional services for compliance are typically available at cheaper rates than that for companies, making it cost effective to maintain an LLP.Documents Required for LLP Registration
Scanned Copy of:- PAN & Aadhaar of all the Designated Partners/Partner
- Passport size photograph of all the Designated Partners/Partner
- Specimen Signature of Authorised Signatory
- Utility Bill of Registered office address (Not older than 2 months) (Electricity bill preferred)
- No objection certificate from legal owner of Registered office address (Format to be provided by STARTUP SAMPARK)
- Driving License or Passport or Voter’s ID (Any one of it) of every Subscribers/Directors
- Latest Bank Statement (without password protection) or Electricity Bill or Mobile Bill or Telephone Bill of every Subscribers/Directors. (Any one of it) (Not older than 2 months)
- LLP Agreement (STARTUP SAMPARK shall share the draft deed with you, as per your requirement)
- Email Id & Phone No. of all Designated Partners/Partner
- Highest Qualification of all Designated Partners/Partner
- Place of Birth of all Designated Partners/Partner
- Number of Months/Years of stay at current address
- Main Business Objects of Proposed LLP
- Capital Contribution and shareholding division
Difference between partnership firm, private limited company & limited liability partnership firm
| Particulars | Private Limited Company | Limited Liability Partnership (LLP) | Partnership Firm |
|---|---|---|---|
| Governing body | Private Limited Company is governed under the Companies Act, 2013. | Limited Liability Partnership (LLP) is governed under the Limited Liability Partnership Act, 2008. | Partnership Firm is governed under the Partnership Act, 1932 |
| Audit of accounts | Auditing of the financial statements of a Private Limited Company is mandatory. | Auditing is necessary only if the annual turnover exceeds Rs. 40 lakhs, or contribution exceeds Rs. 25 lakhs in a financial year. | Auditing is necessary only if the annual turnover exceeds Rs. 40 lakh, or contribution exceeds Rs. 25 lakhs in a financial year. |
| Maximum members | Maximum number of members in a Private Limited Company is 200 | Maximum number of members in an LLP is unlimited. | Maximum, in case of general business, 20 people, and in case of banking business, 10 people. |
| Minimum capital | There is no minimum capital required for the formation of Pvt Ltd | There is no minimum capital required for the formation of an LLP | There is no minimum capital required for the formation of an LLP |
| Name format | The name of a Private Limited Company should end with the words Pvt Ltd or Private Limited | The name of an LLP should end with the words LLP | There is no as such requirement to suffix LLP or Pvt Ltd |
| Flexibility | A Private Limited Company is more flexible as compared. | An LLP is less flexible as compared to Private Limited Company | A Partnership firm is less flexible as compared to other two formats |
| Compliance | The compliance requirement in a Private Limited Company is high. | The compliance requirement in case of LLP is moderate. | The compliance requirement in case of Partnership Firm is very low. |
Annual Compliance
Income Tax ReturnEvery LLP should comply with income tax law by filing ITR on or before 30th September / 31st July.GST ReturnsLLPs registered under GST law should comply with GSTR-3B, GSTR-1, GSTR-9/9A returns.ROC ComplianceFiling with registrar Form 8 and Form 11 is mandatory for every LLPStartup sampark procedure for LLP registration
LLP Registration is very detailed procedure, which requires keen knowledge, procedure and team of professionals. Each Company incorporation has its tailored requirements. We at STARTUP SAMPARK have a full-fledged, dedicated team of professionals. You are required to fill the form and then our experts will reach out to you, to know the exact requirement and gather further information. Then our experts at STARTUP SAMPARK will be at your disposal for assisting you with guidance concerning LLP Registration and its compliances. Our professionals will assist you in planning seamlessly at the least cost, confirming the successful conclusion of the process. We shall guide you with Do’s and Don’t’s as well. We will begin working on your request once all the information is provided, and the payment is received.Why STARTUP SAMPARK?
STARTUP SAMPARK is one of the platforms which coordinates to fulfil all your Secretarial, Legal, Licensing and Taxation requirements and connect you to consistent professionals. Our team consist of Chartered Accountants, Company Secretaries, Cost Accountants, Advocates, Patent and Designs Agents, Trademarks & Copyright Attorneys, Paralegals and other legal professionals.We are a management consultancy and technology platform to simplify legal and business related matters. We are committed to help start-ups, small business owners and non-compliant businesses in solving their legal, secretarial and taxation compliance related to setting up and running the business smoothly and compliantly.Our clients can also track the assignment progress at all times through a dedicated portal provided to you along with User Id and Password. You can comment and find the resolution and ask questions on the dedicated portal provided to you. If you have any questions about the LLP incorporation and registration process, our experienced representatives are just a call away.- Step 1: Fill the query form.
- Step 2: Our Expert will connect with you
- Step 3: Make payment through hassle free payment portal
- Step 4: Get confirmation on mail and receive User Login and password
- Step 5: Submission of documents with us on our client portal
- Step 6: Executive will process your application
- Step 7: Track progress of your order all the time on our client portal
- Step 8: Greetings, Order completed
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FAQs
Limited Liability Partnership (LLP) is a balanced structure, carrying benefits conventional partnership and still limiting personal liabilities of the partners. It is regulated as a contractual agreement between the partners under the Limited Liability Partnership Act, 2008.
There must be at least two individuals to be appointed as Designated Partners, out of which at least one must be an Indian resident. However, other partners can have the designation of Partners. Also, there is a pre-requisite to have an address of a business in India so as to register it as a registered office for your LLP.
No. There is no minimum amount prescribed to form an LLP in India. It can be started with any amount of capital demanded by the business. Although there is no minimum requirement, every partner must make a contribution financially to form LLP. The amount of capital contribution is disclosed in the LLP Agreement and amount of stamp duty is decided by the total contribution amount. However, we recommend infusing at least 50000 rupees as capital in LLP, to avoid minimum balance requirement for opening of a current bank account.
The Stamp duty varies state wise and capital contribution wise. A detailed chart has been drawn out above under tab Stamp Duty.
LLP name availability is as an essential part for an online LLP registration. However, this is completely optional. We recommend reserving the name beforehand to avoid hassle and to avoid form rejection. The name of an LLP is reserved through a web-based form named “RUN-LLP” (Reserve Unique Name). The partners can provide maximum of 2 names in preferential order to reserve anyone. The registrar may ask to re-submit the application with different name, if names do not fall under criteria of uniqueness, relevancy or does not fulfil the necessary requirements.
There are no limitations in terms of citizenship or residential status to be a Partner in LLP. Therefore, the LLP Act, 2008 allows Foreign Nationals, including Foreign Companies & LLPs to incorporate LLP in India. The pre-requisite is to have at least one Designated Partner who is a resident of India. However, the person should be of the age 18 years or above. This is to ensure that the person in LLP is not a minor and competent enough to enter into contract.
The concept of DPIN (Designated Partner Identification Number) is replaced by DIN with respect to the LLP incorporation. Director Identification Number is a unique number assigned by the MCA to Individuals on whose behalf the application is made. This allows any individual to be Director in any Company or Designated Partner in any LLP. The application of DIN allotment is made with incorporation application in FiLLiP subject to maximum 2 DIN.
DSC is a short form for Digital Signature Certificate and is a legally recognized method of signing the documents electronically.
Yes, an existing partnership firm or a company (unlisted) can be converted into LLP. There are many advantages to converting a partnership firm into an LLP. Check under our conversion tab to know more.
Once online LLP registration completes, the partners must open a bank account in the name of LLP for business transactions. There is no additional requirement to be fulfilled. However, the partners must deposit the agreed amount to contribute as and when required. Furthermore, the annual compliance filing must be fulfilled every year upon LLP registration.