Limited Liability Partnership Registration

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What is a LLP?

LLP is an alternate Corporate Business vehicle that provides the benefits of limited liability ( one partner is not responsible or liable for another partners misconduct or negligence) and allows its members the flexibility of organising their internal structure as a partnership based on a mutually arrived agreement.
LLP is one of the easiest types of companies to embed and manage in India. Ease of incorporation and simple compliance procedures have made LLPs a preferred choice among small businesses and professionals.

An Overview

Limited Liability Partnership (LLP) is governed by the Limited Liability Partnership Act, 2008, and combines the benefits of a partnership firm with that of a private limited company.LLP is an alternate Corporate Business vehicle that provides the benefits of limited liability but allows its members the flexibility of organising their internal structure as a partnership based on mutually arrived agreement. It was intended to bridge the gap between the Companies Act and the Partnership Act, 1932. LLP was introduced to provide a type of business that is easy to maintain and operate. It also helps the owners by limiting their liability. Since its inception in 2010, LLP has been widely accepted as a business venture in India.

How is LLP different from Partnership Firm and Private Limited Company?

Sr. No.	Basis	Partnership Firm	Private Limited Company	Limited Liability Partnership
1	Prevailing Law	Partnership is governed by ‘The Indian Partnership Act, 1932’.	Companies are governed by ‘Companies Act, 2013’.	Limited Liability Partnerships are governed by ‘The Limited Liability Partnership Act, 2008’.
2	Capital Required	No minimum capital requirement.	No minimum capital requirement.	No minimum capital requirement.
3	Time of Registration	5-7 working days. Partnership Registration letter is received after a year.	12-15 working days.	10-12 working days.
4	Name of Entity	Any name as per choice.	Name to contain ‘Private Limited’ in case of Private Company as a suffix.	Name to contain ‘Limited Liability Partnership’ or ‘LLP’ as a suffix.
5	Registration	Registration is optional.	Registration with the Registrar of ROC compulsory.	Registration with the Registrar of LLP compulsory.
6	Cost of Formation	The Cost of Formation is negligible. However, the cost of registered Partnership cost as good as registration cost of LLP.	Minimum Statutory fee for incorporation of Company is Relatively High.	The cost of Formation is comparatively lesser than the cost of formation of Company and more than the formation of Partnership firm.
7	Perpetual Succession	Does not enjoy perpetual succession.	It has perpetual succession and members may come and go.	It has perpetual succession and partners may come and go.
8	Number of Members	Minimum 2 and Maximum 20.	2 to 200 members in case of Private Company.	Minimum 2 partners and there is no limitation of maximum number of partners.
9	Liability of Partners/Members	Unlimited. Partners are severally and jointly liable for actions of other partners and the firm and liability extend to their personal assets.	Generally limited to the amount required to be paid up on each share.	Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner.
10	Annual Filing	No return is required to be filed with the Registrar of Firms.	Annual Financial Statement and Annual Return is required to be filed with the Registrar of Companies every year.	Annual Statement of accounts and Solvency & Annual Return is required to be filed with the Registrar of Companies every year.
11	Audit of accounts	Partnership firms are only required to have tax audit of their accounts as per the provisions of the Income Tax Act.	Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 2013.	All LLP except for those having turnover less than Rs.40 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008.

One should choose the type of organization based on their needs. For example if one wants to raise funds, then registering a company is more beneficial than registering an LLP.

Advantages of starting an LLP

Separate Legal Entity
LLP enjoys the advantages of a separate legal identity within the meaning of the law, which clearly states that company assets and liabilities are not partner assets and liabilities.
Limited Liability of Partners
The partners of an LLP are not liable to bring any further personal contribution for settlement of dues of the company, over and above their capital contribution.
Perpetual Succession
Like a company, its existence continues even after the exit/retirement/death of partners.
No Minimum Capital
No minimum capital is required for LLP incorporation. It can be even registered with Rs. 1,000 as total capital contribution from a partner.
Simple procedures for transfer of Ownership
The interest in limited partnerships has no influence on their existence, as they can be easily transferred through the introduction of a new designated partner in the LLP and are independent legal entities.
Audit is not compulsory
LLPs having a capital amount of lower than Rs. 25 lakh and turnover below Rs. 40 lakh per year do not require any formal audits.
LLP Tax Benefits
Various taxes such as dividend distribution tax and alternative minimum tax are also exempt. The LLP tax rates are low compared to companies.

Checklist

As per LLP Act, 2008, for registering an LLP in India, the below conditions have to be met:
Minimum 2 partners are required to form an LLP, and at least one designated partner should be an Indian resident.
If the partner is a body corporate, then it should nominate a natural person as an authorized person.
No minimum capital requirement for an LLP.
All the designated partners should have a Designated Partner Identification Number (DPIN) and a Digital Signature Certificate (DSC).
LLPs registered office does not have to be a trading location. Even the rental premise will work as a registered office.

Steps to Incorporate an LLP

Step 1: Apply for DSC and name approval.

Step 2: Filing of documents.

Step 3: Registration of LLP Deed.

Step 4: Apply for PAN, TAN, and bank account.

Requisite Documents

For Designated Partners
Identify the 2 directors (or more) and submit their documents as given below.

For Registered Office

A document in the title of the company's property, or a notarized copy of the rental agreement representing the company and a copy of the rental payment receipt within one month.
NOC from Landlord to use the premises by the company as its registered office.
Electricity bills for phone, gas, electricity, etc., showing the address of the building on behalf of the owner or document, within two months.

Compliances post LLP Formation

Post receipt of LLPIN Number from the Registrar of companies, the LLP has to register the respective LLP Deed with the Registrar of Companies within 30 days of Incorporation of LLP.

All LLPs registered in India must comply with different rules and regulations like annual filing at the MCA portal, KYC of designated partner, etc. Failure to do this may result in partner penalties or disqualification.

We at ICI will help you in maintaining statutory compliances for your LLP at a very affordable price point.

The following are the compliances that an LLP must complete each year:-

Incorporating an LLP Company at ICI

The average time to complete LLP registration is approximately 10-15 business days, depending on government processing time and customer documentation submission.

You can start LLP by following the steps below.
Submit a request by clicking here.
Our Corporate Manager (CM) will get in touch with you to collect your documents along with a simple checklist.
Submit the filled checklist along with your documents for verification. Our ICI team of experts will validate and process your documents. The CM shall keep you informed throughout the process.
After sending and confirming the documents with the checklist, we shall proceed with the application of your DSC . In parallel to the The DSC application and name reservation application must be submitted to the MCA. Requests for name approval will be processed by the MCA within 24-72 hours. You can suggest up to 3-4 selected names.
On obtaining the name approval and the digital signatures, all the incorporation documents for the registration of the LLP are drafted and sent to the Partners for signature.
The signed company formation documents are sent to the MCA together with the company formation form , DIN registration and the required documents of the LLP. The approval by the MCA takes 2-5 working days.
Upon approval, we will assist LLP in obtaining PAN and TAN and to begin opening a bank account on behalf of LLP.
At the same time, we would create an LLP Deed. All LLP partners must sign the LLP Deed on stamp paper. This deed shall determine the mutual rights and duties amongst the partners, and between the LLP and the partners. The signed LLP partnership certificate will be verified and uploaded to the MCA portal within 30 days of establishment to complete the LLP registration process.

FAQs

a. What is the Eligibility to become a designated partner in an LLP?

Only Individual can act as a designated Partner. However, LLP, Companies can become partners in the LLP acting through its authorised Representative.

b. I am an NRI. Can I start an LLP business in India?

Yes, non-resident Indians and foreigners can open an LLP business in India. At least one of the LLP’s designated partners must be an Indian citizen.

c. What is an LLP Agreement?

The LLP agreement exists between the partner and the LLP in relation to the relationship between the individual partners of LLP. LLP contracts typically consist of management guidelines, new partner involvement, policy development strategies, and more.

d. Is it cheaper to operate an LLP than a limited liability company?

Yes. In particular, many conformances, such as testing, apply to LLP only at large turnovers. Most LLPs spend about half of their limited liability company in registration and compliance activities in the first year.

e. How can I become an LLP partner?

A person who signs the “Founding Document” at the time the LLP is established becomes a partner of the LLP. After incorporation, new partners can be admitted to the LLP as per the conditions and requirements of the LLP Agreement.

f. How many partners do I need to integrate LLP?

At least two people are required to install LLP. LLP requires at least two partners and can have a maximum of any number of partners.

g. How long is the incorporation of LLP valid?

After the foundation, LLP remains active as long as the annual compliance is regularly observed. If you fail to meet your annual compliance, your LLP may be idle and will be removed from your registry after some time.

h. What is DPIN?

Designated Partner Identification Number (DPIN) is a unique identification number assigned to all existing and proposed designated partners of an LLP. It is mandatory that all current or proposed designated partners have a DPIN. DPIN never expires and a person can have only one DPIN.

i. Can partners withdraw or be removed from the LLP?

The partner remains the partner of LLP even after all rights have been transferred to LLP unless otherwise specified in the LLP agreement and with the consent of all the Partners. Partners can also withdraw from LLP. It is possible to remove a partner from an LLP to whom an LLP contract applies.

j. Can I register the office address as a home address?

Yes, you can display the address of your house or apartment building as the address of the company headquarters. As soon as the company is set up, stable, and ready for operation, you can change the address of your registered office by notifying the ROC office. If you are on rent and the invoice is in the name of the owner, then a ‘No Objection Certificate’ is required.

k. Does the partner have to be physically present during this process?

No, the complete process will be carried online. ICI has developed Standard Operating Processes (SOPs) that deliver the entire business registration exercise online in a seamless way.

l. What is the LLP tax rate? Is the dividend distribution tax (DDT) applicable?

Tax applies to LLP at 30% (plus applicable surcharge and cess) on the net profit of the firm. There is no distribution tax applicable on such already taxed profits. Partners can withdraw such profit after tax from their current account and won’t be taxable in their personal capacity

m. Still, have confusion?

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Call us at +91 7738 066 334 or Mail us at info@indiacompanyincorporation.com

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