Limited Liability Partnership (LLP) is a new form of corporate structure that combines the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. The LLP is a body corporate and a legal entity separate from its partners.
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.
|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.
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 .
For Designated Partners
Identify the 2 directors (or more) and submit their documents as given below.
For Registered Office
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 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:-
Only Individual can act as a designated Partner. However, LLP, Companies can become partners in the LLP acting through its authorised Representative.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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