LIMITED LIABILITY PARTNERSHIP REGISTRATION
LLP is one of the most preferred form of business entity in India. It can be easily incorporated with a minimum of 2 partners.
Limited Liability Partnership (LLP) is one of the most preferred form of business entity in India. It can be easily incorporated with a minimum of 2 partners. There is no limit on the maximum number of partners of LLP. Apart from the partners, minimum two Designated Partners are required to fulfill the statutory obligations. Partners are those people who run and manage the working of the LLP.
The roles and responsibilities of designated partners are governed by the LLP agreement.
The cost involved in Limited Liability Partnership (LLP) registration is very minimal in comparison to other business registration. Limited Liability Partnership (LLP) registration is done under the Limited liability Partnership Act, 2008.
As Limited Liability Partnership has the composition of both the corporate and the partnership firm. It enjoys the benefits of both the corporate and the partnership firm. LLP involves less compliances as compared to any other business. The liability of the partners is limited. LLP enjoys the status of separate legal entity.
Benefits of LLP Registration
The benefits of LLP Registration are: -
Separate Legal Entity
Continuity of LLP
Minimum Capital Not Required
Transfer of Ownership
An LLP is a separate legal entity which is different from that of its partners.
The existence of LLP cannot be interrupted existence. It has perpetual succession which means that even if the partners leave, the firm will not dissolve
To form an LLP, no need to maintain any minimum capital requirement. Any one can form an LLP. The incorporation cost is very less as compare to other entity options.
The ownership of LLP can be easily transferred. Any person can can easily be introduced as a designated partner and the ownership right can be changed.
Buying or selling of any asset
The Liability of the partners of LLP is limited. Partners will not be held liable for any legal liability of LLP. There liability is upto the contribution made by them.
In case of LLP, audit is not required. Audit is only required in case the annual turnover of the LLP exceeds the limit of Rs. 40 lakh or in case the capital contribution increases the limit of Rs. 25 lakh.
An LLP can easily buy or sell any asset because it is a separate legal entity. There will be no rights of partners on the asset owned by the LLP.
An LLP has few compliances to follow as compared to the other forms of business entities.
Information Required for LLP Registration
To register the Limited Liability Partnership firm, one must check that they fulfill the following requirements-
- A minimum of two partners are required to incorporate an LLP. Any number of people can be a partner as there is no limit to the maximum number of partners. There should be at least 2 Designated Partners and they should be an individual.
- In case a body corporate is a Partner , then it should nominate a natural person to act on behalf of it.
- One of the Designated Partner must be an Indian resident;
- Designated Partner Identification Number (DPIN) of all Partners.
- Digital Signature Certificate (DSC) of all the Designated Partners.
- Identity Proof and Address proof all the Partners
- Passport size photograph of all the partners.
- The name of the Limited Liability Partnership. The name of the LLP must be exclusive.
- The object of the LLP. An object indicates the type of business activities an LLP will follow.
- Address proof for the registered office of LLP. NOC should be obtained from the landlord, if t he Rented house is the registered office of the Company. Both Commercial and rented place can be the registered office of the Limited Liability Partnership.
Documents required for LLP Registration
The list of mandatory documents required for LLP are as follows:
Documents of Partners –
- Identity proof such as Pan Card, Passport, Voter id etc.
- Address Proof such as Latest Bank Statement ,Telephone or Mobile Bill, Electricity Bill, Gas Bill (Should not be older than 2 months)
- If the partner is a Foreign individual or NRI, then a copy of passport is required which must be notarized or apostilled.
- Consent to act as the Designated Partners of the LLP.
- Subscriber sheet signed by all the partners.
- Passport size photograph of all the partners.
- Designated Partners Identification (DPIN) is required.
- Digital Signature Certificate is required.
Documents for Registered office of LLP –
- Office address proof such as Conveyance or Lease deed or Rent Agreement etc. along with rent receipts, if the premises is rented.
- No Objection Certificate from the owner of the property, if the property is rented.
- Copy of the utility bills such as Latest Bank Statement ,Telephone or Mobile Bill, Electricity Bill, Gas Bill (not older than two months) in the name of owner if the said premises is rented.
- If the premises is self owned then latest utility bill in the name of the designated partner along with NOC would be suffice.
LLP Registration Process
The incorporation of Limited Liability involves the following steps :-
Step – I : To procure Digital Signature Certificate (DSC)
One has to procure or obtain Digital Signature Certificate (DSC) before the incorporation of LLP. The applicant must apply for the DSC beforehand so that the incorporation work gets done easily. The Incorporation form must be digitally signed by the Partners, so for this person must obtain the DSC before registration of an LLP.
Step – II : To apply for the reservation of LLP name
The second step is to apply for the name of the LLP. LLP-RUN(Limited Liability Partnership-Reserve Unique Name) is the online form as prescribed by the Ministry of Corporate Affairs . LLP-RUN is filed for the reservation of the name of proposed LLP. The name of the LLP must be exclusive. The proposed name should not be matched with any other existing LLP firm name. Registrar provides the 15 days time to rectify the defects if the proposed name gets rejected. A requisite fees has to be paid for the name application.
Step – III : To arrange and submit the Final documents for incorporation
The third step is to arrange and prepare all the final documents as required for the incorporation of LLP. The Final documents must be digitally signed by all the partners. After all the process gets done, then the final documents will be submitted on the MCA site for the Incorporation of LLP. For the incorporation, the applicant has to file e-form “FiLLiP” (Form for incorporation of Limited Liability Partnership). E-form FiLLiP is an integrated form. With this E-form FiLLiP, name of the LLP can also be applied.
The partners who does not have the DPIN number can also apply the same with this form. It is a single window Form for Incorporation of LLP. There is no need to file a separate form for the registered office address as the same can be done with this e-form only.
Step – IV : Certificate of Incorporation
If the registrar will not find any deficiency in the application, then the Certificate of incorporation will be alloted.
Step – V : To prepare and file Limited Liability Partnership Agreement
Through LLP agreement the mutual rights and duties between the partners and also between the LLP and its partners is governed. Form 3 is filed for the registration of LLP agreement within 30 days from the date of its incorporation.
Step – VI : To apply for PAN, TAN, GST and opening of Bank Account of LLP
The final step is to apply for the PAN, TAN and GST of the LLP. It can be done via online or offline mode. PAN and TAN application is made on NSDL portal. A bank must be opened in the name of the LLP after its incorporation.
Post Incorporation Compliance
Compliances to be done after Incorporation of LLP
After the registration of LLP is done properly, then the registered LLP has to do a following compliances;
- To file an LLP Agreement
- PAN & TAN application
- To open Bank Account in the name of the LLP
Annual Compliances by LLP
The annual compliances that should be followed by the LLP are:
- To file Statement of Account & Solvency.
- To file Annual Return of LLP
- To file Income Tax Return
As the LLP formation cost is very minimal, so all the small size business people prefer LLP over any other form of business. It has to follow minimum compliances. Money and time can be saved if any one opt for LLP registration. It is also preferred because it saves tax too.
Frequently Asked Questions (FAQ's)
Under which Act, LLP is governed?
LLP is governed under the Limited liability Partnership Act, 2008.
What is the minimum number of partners required to form an LLP?
Minimum 2 partners are required to form an LLP. There is no maximum limit of partners.
Who are eligible to become a partner in LLP?
An individual or an organization can become a partner. A foreign individual or NRI can also become a partner. The individual must have attained the age of 18 years.
Are foreign individual or NRI’s allowed to become a partner?
Yes, a foreign individual or NRI’s are allowed to become a partner or designated partner.
Who has the responsibility to maintain the Compliances of the LLP?
The designated partners are responsible to maintain all the LLP compliances and other related matters to avoid penal provisions.
How much time is required to register an LLP?
LLP can be registered within 15 to 20 working days, provided all the documents for LLP registration are true and fair.
What is the penalty if one fails to file the LLP agreement?
If anyone fails to file the LLP agreement within the 30 days from the date of its incorporation, then a penalty has to be paid on per day basis. The penalty is Rs.100 per day of default with no upper limit on the maximum fine.
What is LLP agreement?
An LLP agreement governs the mutual rights and duties between the partners and also between the LLP and its partners is governed. It also states the objectives of the LLP. Form 3 is filed for the registration of LLP agreement within 30 days from the date of its incorporation.
What is the difference between a Company and an LLP?
- A company is governed by Companies Act, 2013 whereas an LLP which is a contractual agreement between the partners is governed by Limited liability Partnership Act, 2008.
- LLP is more flexible in nature in comparison to the Company.
- LLP has to bear less Compliances in comparison to the Company
What is the minimum capital contribution required to register the LLP?
No minimum Capital contribution is required to register an LLP.