Limited Liability Partnership Registration

Overview

It is one of the most common forms of business in India, used by small businesses operating in the organized sectors. A LIMITED LIABILITY PARTNERSHIP REGISTRATION required at least two members in order to register, both the members can be a Designated Partners cum Shareholder of the company. A LIMITED LIABILITY PARTNERSHIP REGISTRATION can have up to 200 people as members as per the LLP Act, 2008. It Can Be Converted into Private Limited Company in future. The cost of LLP incorporation is lesser than a Private Limited Company incorporation and compliances are less stringent. Though as far as fund raising is concerned, Pvt Ltd Company has an edge over registered LLP. Though incorporated LLP (Limited Liability Partnership) Firm is better placed to raise fund than One Person Company. For LLP incorporation, we would be needing 2 DINs and 2 DSC. It also has huge Tax Advantages over Partnership or Proprietorship firms.

Firstly, you need to find unique name for the LLP. Proposed name should NOT be identical with another existing name. If Proposed name includes the name of a registered trade mark or a trade mark which is subject of an application for registration, then for approval of proposed name CONSENT of the owner or applicant for registration as the case may be, shall be required to be obtained and produced by the promoters.

Secondly, you need to comply with the MCA guidelines. You can do so by ensuring that the name has a unique component and a descriptive component.

Advantages of LLP

  • Separate legal entity : An LLP is a separate legal entity. This means that it has assets in its own name and can sue and be sued. Furthermore, one partner is not responsible or liable for another partner’s misconduct or negligence.
  • Perpetual Succession : An incorporated LLP has perpetual succession. Notwithstanding any changes in the partners of the LLP, the LLP will be a same entity with the same privileges, immunities, estates and possessions.
  • Raising Money : Financing a small business like sole proprietorship or partnership can be difficult at times. A LLP being a regulated entity like company can attract finance from PE Investors, financial institutions etc.
  • Compliances : As compared to a private company, the number of compliances are on lesser side in case of LLP.
  • Easy to Form : It is very easy to form LLP, as the process is very simple as compared to Companies and does not involve much formality.
  • Flexible agreement :The partners are free to draft the agreement as they please, with regard to their rights and duties.
  • Limited liability : The liability of the partners is limited to the extent of his/her contribution to the LLP. Unless fraud has been detected, the personal assets of the partner are protected from any liability of the LLP
  • No requirement of minimum contribution : As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital. Moreover, the contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefit to the LLP.

Disadvantages of LLP

  • Inability to Have Equity Investment : A LLP does not have the concept of equity or shareholding like a company. Hence, angel investors, HNIs, venture capital and private equity funds cannot invest in a LLP as shareholders. Thus, most LLPs would have to rely on funding from promoters and debt funding.
  • Higher Income Tax Rate : Income tax rate for a company with a turnover of up to Rs.250 crores is 25%. However, LLPs are taxed at a 30% rate irrespective of the turnover.
  • Higher Penalty for Non-Compliance : Even if a LLP does not have any activity, it is required to file income tax return and MCA annual return each year. In case a LLP fails to file Form 8 or Form 11 (LLP Annual Filing), a penalty of Rs.100 per day per form is applicable. There is no cap on the penalty and it could run into lakhs, if an LLP has not filed its annual return for a few years.
  • No requirement of minimum contribution : As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital. Moreover, the contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefit to the LLP.In case of a company, a penalty of up to Rs.4800 is applicable for not filing annual return for up to 270 days. However, the penalty for not filing annual return for company is set to be increased and matched with that of LLP.

Why Choose Limited Liability Partnership Registration

  • It is flexible and has limited liability.
  • Lesser compliance cost .
  • The possibility to grow big and expand

Required Documents

  • Copy of Rental Agreement (along with NOC from owner)/Sale Deed in case of own property.
  • Telephone or Mobile Bill/Electricity or Gas Bill Scanned copy of Notarized Rental Agreement in English
  • Affidavit from Partner
  • Copy of PAN card, Identity and Address Proof for DPIN for up to 2 directors

Process

Due to Digitalization of registration process, it’s become easy to register the Limited Liability Partnership

Obtaining DSC & DPIN

For obtaining DSC, self-attested copy of partner's pan card & his address proof is required.

Application for LLP Name

Firstly You need to find your name has not been taken

Secondly, you need to comply with the MCA guidelines. You can do so by ensuring that the name has a unique component and a descriptive component.

Company Incorporation Certificate

Once all the documents are approved by MCA , it will issue a incorpation certificate.

Apply for PAN & TAN & Bank Account

On the basis of incorporation certificate u can apply for the TAN , PAN & Bank.

FAQ's

1.What is DPIN?

The DPIN (Designated Partner Identification Number) used for identifying a designated partner in a Limited Liability Partnership (LLP) firm, is equivalent to the DIN (Director Identification Number) of a director of a private or public limited companyDuis aute irure dolor.

2.Can LLP have more than one addresss?

L. It has been provided in the Act that a document may be served on a LLP or a partner or designated partner by sending it by post or by any other mode (to be prescribed under Rules) at the registered office and any other address specifically declared by the LLP for the purpose in such form and manner as may be prescribed (in the rules). Thus, an LLP shall have option to declare one more address (other than the registered office) for getting statutory notices/letters etc. from Registrar.

3.Whether audit of all LLPs would be mandatory?

. Every LLP in India, whose annual turnover exceeds the magnitude of Rs. 40Lakhs or the total contribution of its partners gets above the limit of Rs. 25Lakhs, is mandatorily need to get its accounts audited every financial year, strictly in accordance with the rules and provisions provided in the LLP Rules of 2009.

4.Whether any Annual Return would be required to be filed by an LLP?

Every LLP would be required to file Annual Return with ROC. A duly authenticated Annual Return in e- Form-11, is to be filed with the Registrar, together with the prescribed fee, within a period of 60 days from the closure of every financial year.

5.Which documents are available for public inspection in the office of Registrar?

The following documents/information will be available for inspection by any person on payment of prescribed fees:-

• Incorporation document,

• Names of partners and changes, if any, made therein,

• Statement of Account and Solvency

• Annual Return

But LLP Agreement is not available for public inspection.

6.Can Partnership Firm, Private Limited Company and Unlisted Public Company Converted to Limited Liability Partnership?

Yes, The Registrar shall, on conversion of a firm by filing Form 17, private company or an unlisted public company by filing Form 18 into limited liability partnership along with prescribed fees, issue a Certificate of Registration under his seal in Form 19.

7.Whether offences can be compounded?

Every application for the compounding of an offence shall be made in Form 31 to the Registrar who shall forward the same, together with his comments thereon, to the Central Government.

Where any offence is compounded under whether before or after the institution of any prosecution, intimation thereof shall be given by the LLP to the Registrar in Form 22 within seven days from the date on which the offence is so compounded.

8. What are the requirements for change in registered office ?

Where the change in place of registered office is from one state to another state, the limited liability partnership shall publish a general notice, not less than 21 days before filing any notice with Registrar, in a daily newspaper published in English and in the principal language of the district in which the registered office of the limited liability partnership is situated and circulating in that district giving notice of change of registered office.

Where the change in place of registered office is from one place to another place within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar or from one state to another state, the limited liability partnership shall file the notice in Form 15 with the Registrar from where the limited liability partnership proposes to shift its registered office with a copy thereof for the information to the Registrar under whose jurisdiction the registered office is proposed to be shifted