A Limited Liability Partnership (LLP) is a popular business structure in India, offering a blend of the flexibility of a partnership with the limited liability of a company. This guide provides a detailed overview of LLP registration, covering prerequisites, the registration process, compliance requirements, advantages, disadvantages, and frequently asked questions.
An LLP is a legal business structure that combines the benefits of a partnership and a company. Partners in an LLP have limited liability, meaning their personal assets are protected from business debts, similar to shareholders in a company. However, LLPs retain the flexibility and simpler regulatory requirements of a traditional partnership. LLPs are governed by the Limited Liability Partnership Act of 2008.
To register an LLP in India, you must meet the following criteria:
• Minimum Two Partners: An LLP requires a minimum of two partners, with no maximum limit.
• Designated Partners: At least two designated partners are mandatory, and they must be natural persons. At least one designated partner must be an Indian resident.
• Body Corporate Partner Nomination: If a body corporate is a partner, it must designate a natural person as its representative.
• Agreed Contribution: Each partner must contribute to the LLP’s capital as agreed upon.
• Minimum Authorized Capital: While there’s no minimum capital requirement to start an LLP, the registration fee varies based on the capital contribution declared.
• Indian Resident Designated Partner: At least one designated partner must be an Indian resident.
• Separate Legal Entity: An LLP is a separate legal entity, distinct from its partners. It can own assets, enter into contracts, and sue or be sued in its own name.
• Perpetual Succession: An LLP continues to exist even if partners change (through admission, resignation, or death).
• Limited Liability: Partners’ liability is limited to their agreed contribution to the LLP. Their personal assets are generally protected from business debts.
• Flexible Management: LLPs offer flexibility in managing the business, as the LLP agreement can be tailored to the specific needs of the partners.
• Less Compliance Burden: Compared to companies, LLPs have fewer compliance requirements.
• Limited Liability Protection: Protects partners’ personal assets.
• Separate Legal Entity: Enhances credibility and allows the LLP to enter contracts and own property in its name.
• Perpetual Succession: Ensures business continuity.
• Flexibility in Management: Allows for customized management structures.
• Lower Compliance Burden: Reduces administrative overhead.
• Easy Formation: The registration process is relatively straightforward.
• Potential Penalties for Non-Compliance: While compliance is less burdensome than for companies, penalties for non-compliance can be significant.
• Dissolution Issues: LLPs can face dissolution if the number of partners falls below two and remains so for more than six months.
• Difficulty in Raising Large Capital: LLPs may find it more challenging to raise large amounts of capital compared to companies, as they cannot issue shares to the public.
• Uniqueness: Choose a unique name that is not already in use.
• Descriptive: Include words that accurately describe the LLP’s business activities.
• Suffix: End the name with “LLP” or “Limited Liability Partnership.”
• PAN Card/ID Proof of Partners: Aadhaar Card, Voter ID, Driving License, Passport.
• Address Proof of Partners: Recent bank statement, utility bill (electricity, telephone, gas).
• Passport-size Photographs of Partners: White background.
• Proof of Registered Office Address: Rental agreement (if applicable), No Objection Certificate (NOC) from the landlord, recent utility bill.
• Digital Signature Certificate (DSC): For at least one designated partner.
• For Foreign Nationals and NRIs: Passport, proof of overseas address.
1. Obtain DSC: All designated partners need a DSC.
2. Obtain DIN: Partners who don’t have a Director Identification Number (DIN) must apply for one.
3. Choose an LLP Name: Select a unique and available name.
4. File LLP Incorporation Form (FiLLiP): This form contains details about the LLP, partners, and registered office.
5. Draft LLP Agreement: Create a comprehensive agreement outlining the rights, duties, and responsibilities of the partners. This must be filed within 30 days of incorporation.
6. Obtain Certificate of Incorporation: The Registrar of Companies (RoC) issues this certificate after verifying the documents.
7. Apply for PAN and TAN: Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the LLP.
LLPs must file annual returns with the Ministry of Corporate Affairs (MCA). This includes:
• Form 11: Statement of Accounts and Solvency.
• Form 8: Annual Financial Statement.
Other compliances include filing income tax returns, tax audit reports (if applicable), and complying with GST regulations if the LLP is registered under GST.
LLP registration costs vary based on the capital contribution and the state of incorporation. Costs typically include DSC fees, DIN fees, name approval fees, registration fees (which vary with capital contribution), and professional fees.
• Minimum 2 Partners
• DIN for all Designated Partners
• Nominee (if a body corporate is a partner)
• DSC for all Designated Partners
• Capital Contribution (no minimum amount, but registration fees vary with contribution)
• Registered Office Address
• Limited Liability: Protects personal assets.
• Easy to Manage: Fewer compliance requirements than companies.
• Enhanced Credibility: Seen as a more formal business structure than sole proprietorships or traditional partnerships.
• Business Continuity: Perpetual succession ensures the business continues even if partners change.
For Limited Liability Partnership (LLP) registration / incorporation and related compliance requirements, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091
