LIMITED LIABILITY PARTNERSHIP (LLP) REGISTRATION
- Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business organization that is simple to maintain, while at the same time providing limited liability to the owners.
- A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization and one partner is not responsible or liable for another partner’s misconduct or negligence. Therefore, all partners have a form of limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a corporation.
- However, unlike corporate shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents. LLP is one of the easiest form of business to incorporate and manage.
BENEFITS OF REGISTERING A LIMITED LIABILITY PARTNERSHIP (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.
- Separate Legal Entity: An LLP is a legal entity and a juristic person established under the Act. Therefore, it has wide legal capacity and can own property and also incur debts.
- Uninterrupted Existence: An LLP has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved.
- Perpetual Succession: An incorporated LLP has perpetual succession. Without effecting any changes in partners of LLP, the LLP remains the same entity, with all rights, privileges, immunities, etc.
- Owning Property: An LLP can acquire, own, enjoy and alienate property in its own name, being a separate legal entity.
- Limited Liability: Limited Liability means the status of being legally responsible only to a limited amount for debts of an LLP. Unlike proprietorships and partnerships, in an LLP the liability of the members in respect of the LLP’s debts is limited.
HOW IS AN LLP DIFFERENT FROM PARTNERSHIP FIRM AND COMPANY
Name of Entity
Any name as per choice
It does not have perpetual succession as this depends upon the will of partners
It has perpetual succession and members may come and go.
It has perpetual succession and partners may come and go
Only registered partnership can sue third party
A company is a legal entity which can sue and be sued
A LLP is a legal entity can sue and be sued
Liability of Partners/Members
Limited to the amount required to be paid up on each share.
Limited, to the extent their contribution towards LLP
Cost of Formation
The Cost of Formation is negligible
Minimum Statutory fee for incorporation of Company is Relatively High
The cost of Formation is comparatively lesser than the cost of formation of Company.
Formalities of Incorporation
In case of registration, Partnership Deed along with form / affidavit required to be filed with Registrar of firms along with requisite filing fee
Various e-forms along the Memorandum & Articles of Association are filed with Registrar of Companies with prescribed fees
Various e-forms are filed with Registrar of LLP with prescribed fees
No return is required to be filed with Registrar of Firms
Annual Financial Statement and Return are required to be filed with the ROC every year.
Annual Statement of accounts and Solvency & Annual Return is required to be filed with ROC every year.
Audit of accounts
Partnership firm is only required to have tax audit of their accounts if the Turnover exceed Rs. 2 Crores
Companies are compulsorily required to get their accounts audited annually.
LLP are compulsorily required to get their accounts audited if turnover exceeds Rs. 40 or its contribution exceeds Rs. 25 Crores.
DIN / DPIN
The partners are not required to obtain any identification number
Each director is required to have a Director Identification Number.
Each Designated Partners is required to have a DPIN.
Number of Members
Minimum 2 and Maximum 20
2 to 50 members in case of Private Company and Minimum 7 members in case of Public Company.
Minimum 2 partners and there is no limitation of maximum number of partners.
Charter Document in which scope is defined
Memorandum and Article of Association
DOCUMENT REQUIRED FOR LLP REGISTRATION:
- Copy of PAN Card of Partners
- Copy of ID Proof of Partners (Prefer Aadhaar Card)
- Passport size photograph of all the Partners
- Residential Proof of registered office (Latest Telephone or Mobile Bill/ Electricity or Gas Bill)
- No Objection certificate (NOC) from Landlord
- Bank statement/Utility bill of Partner
- Copy of Sale Deed (if owned property)
- Copy of Rent agreement (if rented property)
BASICAll Inclusive Fees
PROAll Inclusive Fees
PREMIUMAll Inclusive Fees
FAQ ON LLP REGISTRATION
Two partners are required to form an LLP.
Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.
Yes, any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act. Form 18 needs to be filed with the registrar along with Form 2 for such conversion.
No, only private / unlisted public company can be converted into LLP.
Yes, but only after he has been assigned with DIN/DPIN. However, at least one designated partner in LLP must be a Resident of India. In fact, the foreign director can also be a majority shareholder in the company.
No, name of the LLP shall end with either ‘Limited Liability Partnership’ or ‘LLP’. Word ‘limited’ shall be allowed in name only within ‘Limited Liability Partnership’.
Yes, you can register your LLP at your residential address. It is perfectly legal to start the company at your home or in your garage. MCA team typically doesnâ€™t visit your office. You just have to provide your home address proof such as rent agreement or electricity bill.
Every partner shall inform the LLP of any change in his name or address within a period of fifteen days of such change. The LLP, in turn, would be under obligation to file such details with the Registrar within thirty days of such change in Form 4.
No, Appointment of at least two “Designated Partners” shall be mandatory for all LLPs.Every LLP shall be required to have atleast two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.
Yes, it mandatory to execute and file LLP Agreement in view of Section 2(0) & (q) , 22 and 23 of the Act.
LLP is required to file LLP Form 8 (Statement of Account & Solvency) and LLP Form 11 (Annual Return) annually. The ‘Annual Return’ is required to be filed within 60 days of close of the financial year and ‘Statement of Accounts & Solvency’ shall be filed within 30 days from the end of six months of the financial year to which it relates. Every LLP has to maintain uniform financial year ending on 31st March of a year.