Updated on January 03, 2023 06:50:19 PM
Limited Liability Partnership, commonly known as “LLP”, is a newer form of business in India with limited liability benefits of a private limited company and the flexibility of a partnership firm. The concept of the LLP was introduced in India in 2008 and is regulated by the Limited Liability Partnership Act, 2008.
The maintenance cost and compliances are less in LLP; hence, it has become a preferred form of business organization among entrepreneurs. This form of business structure is ideal for small and medium-sized businesses.
It is easy to start and manage a Limited Liability Partnership in India. A minimum of two partners are required to register an LLP, and there is no upper limit. The LLP Agreement governs the rights and duties of the designated partners. They are directly responsible for the compliances and all the provisions specified in the LLP agreement.
LLP Registration Certificate [Sample]
Following are the advantages of incorporating an LLP in India:
Following are the requirements for incorporating an LLP in India:
The step-by-step procedure of LLP registration in India is as follows:
The first step of LLP registration in India is applying for the digital signature of all the designated partners of the proposed LLP. The incorporation of LLP is entirely digital; all the documents are filed online and must be digitally signed.
Designated partners whose signatures are to be affixed on the e-forms must obtain Class-3 Digital Signature Certificates from government-recognized certifying agencies.
You have to apply for the “Designated Partner Identification Number (DPIN)” of all the designated partners or those intending to be designated partners of the proposed LLP.
LLP-RUN (Limited Liability Partnership-Reserve Unique Name) form is filed for reservation of the name of the proposed LLP. While making the name application, it is recommended that the name should not be similar, identical or phonetically similar to existing LLPs, companies, firms, and trademarks.
You can easily check for name availability using our free LLP name search tool or company name search tool. The system will provide a list of similar or closely resembling names of existing companies or LLPs based on the search criteria.
If it fulfils all the prerequisites, the proposed name of LLP is approved by the Central Registration Centre of the Ministry of Corporate Affairs if found in the ordinance.
The FiLLip form has to be filed for incorporation of Limited Liability Partnership with the Registrar having jurisdiction over the state in which the registered office of the LLP is located. Details which has to be filed in the FiLLip form are:
The Registrar will register the LLP if the documents comply with the LLP Act's relevant provisions. Post-approval of the FiLLip form, Certificate of Incorporation is issued within 14 days in Form-16 from the Central Registration Centre of MCA under the letterhead of the Government of India.
LLP Agreement is the most important document of an LLP that governs the mutual rights and duties of the partners; also between the LLP & its partners.
The incorporation cost of registering an LLP in India, including government and professional fees, is Rs. ₹4,999 Only with Professional Utilities.
Steps | Cost (Rs.) |
---|---|
Digital Signature Certificate | ₹1,000 |
DPIN & Name Approval | ₹200 |
LLP Agreement | ₹300 |
Government Fee | ₹1,000 |
Professional Fee | ₹2,499 |
Documents of both the partners and LLP have to be submitted for incorporating a Limited Liability Partnership:
The expert team at Professional Utilities can help you incorporate a Limited Liability Partnership in India. Register your LLP online in a fast and most affordable manner in three easy steps:
Step 1:
Get in touch via call or contact form
Step 2:
Provide necessary documents
Step 3:
Get your LLP registered in 7-14 days
The LLP formation process takes around 10 working days, subject to document verification by the Ministry of Corporate Affairs (MCA).
Following are the documents you’ll receive after registering an LLP in India:
Features | LLP | Pvt Ltd Company | Partnership | Proprietorship |
---|---|---|---|---|
Definition | A limited liability partnership is a hybrid form having features and benefits of both a company and a partnership firm | Registered type of entity with limited liability to the owners and shareholders | A formal agreement between two or more partners to manage and operate a business | Unregistered type of business entity managed by a single person |
Ownership | Designated partners | Directors and shareholders | Partners | Sole ownership |
Incorporation time | 7-14 working days | |||
Promoter liability | Limited liability | Unlimited liability | ||
Documentation | Incorporation certificate and LLP agreement | Incorporation certificate, MoA, AoA | Partnership deed | MSME and GST registration |
Governance | LLP Act, 2008 | Companies Act, 2013 | Indian Partnership Act, 1932 | - |
Transferability | Transferable | Transferable if registered under ROF | Non transferable | |
Compliance requirements | Form 11, Form 8, ITR 5 | ITR 6, MCA filing, Auditor appointment and more | ITR 5 | Income tax filing if turnover is more than Rs. 2.5 lakhs |
It is better to incorporate an LLP if you want to operate your business with lower maintenance costs and fewer compliances. Also, the designated partners hold ownership of the LLP and the power to manage the LLP.
But if you plan to raise capital for your business in the future through equity or venture capital funding, then a Pvt Ltd Company is more suitable than an LLP.
A Limited Liability Partnership must have a minimum of two Partners to incorporate an LLP. There is no upper limit on the maximum number of partners of LLP.
Yes, it is mandatory to register a Limited Liability Partnership on the MCA portal. An LLP must obtain registration under the Limited Liability Partnership Act to be considered a legal business entity.
An LLP agreement is a written contract between the partners of the Limited Liability Partnership or between the LLP and its designated partners. It establishes the rights and duties of the designated partners towards each other and the LLP.
The features of an LLP are as follows:
An LLP must be registered under the LLP Act to operate its business, while the partnership firm registration is voluntary. The liability of each partner in an LLP is limited to the extent of their capital contribution to the LLP. But in a partnership firm, all partners have unlimited liability and are personally liable for the loss or debts of the firm.
The LLP has a separate legal entity under the law. However, a partnership firm has no separate status apart from its partners. Therefore, an LLP can enter into a contract in its name, but a partnership firm cannot use its name and has to be in the name of authorised partners only.
Any individual or corporate body can become a partner in an LLP. The LLP must have at least two individuals as Designated Partners, and at least one of the Designated Partners must be resident in India.
No, the AoA and MoA are important documents of a company registered under the Companies Act 2013. An LLP is governed by the LLP agreement (deed), not the MoA or AoA.
An LLP can be registered with any amount of money, as there is no minimum capital requirement to form an LLP.
A Digital Signature Certificate is a secure digital key issued by the certifying authorities to validate the identity of the person holding this certificate. MCA has made it mandatory for all designated partners to sign the documents and e-forms through DSC.
Designated Partner Identification Number (DPIN) is a unique identification number assigned by the MCA to the person who wishes to be appointed as a designated partner of a Limited Liability Partnership (LLP).
LLP is a form of partnership that is registered under the Limited Liability Partnership Act, 2008, where liabilities of all the partners are limited to the extent of contribution bought by them. It helps owners limit their liabilities while enjoying the advantages of a limited company that is an edge over a traditional partnership firm.
No partner is liable for unauthorised actions of other partners. Thus individual partners can safeguard them from joint liability arising from misconduct of other partners.
Yes, an existing partnership firm can be converted into an LLP.
An LLP registered with the MCA must file Annual Returns and Statement of Accounts for every Financial Year. It is mandatory for the LLP to file a return irrespective of whether it has done any business.
There are three mandatory compliance requirements for LLP:
LLP is a form of business where only the partners can contribute capital, and their liability remains limited to the extent of their capital contribution to the business. Therefore, an LLP cannot raise funds from the public in any form.
Yes, an LLP can be converted into a Private Limited Company as per the provisions contained in Section 366 of the Companies Act, 2013, and Company (Authorised to Register) Rules, 2014.
An NRI can be a designated partner in a Limited Liability Partnership if he has a DPIN. However, it is mandatory that at least one Designated Partner in the LLP must be an Indian resident.
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