Overview of LLP Registration
LLP Registration is a type of partnership firm which is mostly preferred by the entrepreneur. It is the easiest form of business structure with the benefit of limited liability. LLP registration gives freedom to partners to form a partnership structure where the liability of each partner is limited to the amount they contribute to the business. Limited liability partnership firm registration means that if the partnership fails, creditors cannot ask for the partner’s personal property or income.
What is a Limited Liability Partnership Firm?
LLP Registration is a type of business structure that offers extra benefits in comparison to the partnership firm. It provides limited liability to its partners at very nominal compliance costs. Moreover, the Partners of the firm can organize their internal structure like a partnership firm.
In short, LLP is a separate legal entity from its member that has the power to extend all its assets keeping the liabilities of partners limited. Hence, a Limited Liability Partnership is a hybrid of a company and a partnership firm.
Benefits of LLP Registration
- Enjoys The Status Of Corporate Bodies : As per Section 3 of the Limited Liability Partnership Act, 2008, under LLP registration a firm is a corporate body that has come into force with effect from April 1, 2009. The Indian Partnership Act 1932 does not apply to LLP.
- Perpetual Succession : A Limited Liability Partnership firm has the benefit of perpetual succession and can continue its existence even after the retirement, death, insanity of one or more respective partners in the firm.
- Shares Limited Liability : The most important feature of LLP is limited liability that all its partners should entertain which means their assets are safe and won’t be used to pay the losses or debt of the firm. Apart from it, innocent partners of a Limited Liability Partnership firm are not liable to pay for the wrong deeds done by some other partner.
- Fewer Credentials Are Required : A person can start an LLP firm with just two partners out of which one should be an Indian resident. The designated partners of a limited liability partnership firm can either be an individual or a corporate body. Moreover, there is no specific capital requirement to incorporate a limited liability partnership firm registration.
- Quicker Decision Making Process : An agreement is printed on stamp paper and signed by all the partners that define their roles and duties in the firm. It helps them in the decision-making process.
Easy Online Registration And E-Filling
MCA has simplified LLP registration and made it an easy online procedure. The forms and the documents are filed electronically on the official MCA portal. A designated partner of a limited liability partnership firm has to obtain DSC to sign these documents and forms.
- Easy Conversion : If a public or private company or a partnership firm decides to emerge as a limited liability partnership, they can easily convert as per the provisions of the applicable act.
- Efficient Business Management : The business is managed by the respective partners as per their roles and duties. The designated partners of the firm are responsible for the legal compliances.
- Profit-Sharing Business : Profit is equally shared amongst all the partners of a limited liability partnership firm. An LLP registration cannot be incorporated for a charitable purpose. Its purpose is to carry on business activities to earn profit.
Documents Required for LLP Registration
Here is a list of documents required for registration :
Documents of Partners
- ID Proof/PAN Card/ Of Partners : All the partners of the firm are needed to provide their PAN card at the time of registering Limited Liability Partnership.
- Residential Proof Of Partners : Partner must submit anyone out of Passport, Driver’s license, Voter’s ID, or Aadhar Card. Moreover, the name & other details as per address proof & PAN card must be the same.
- Photograph : Partners should also provide their passport size photograph, preferably on white background.
- Passport (In Case Of NRIs/Foreign Nationals) : Foreign nationals & NRIs have to submit their passport mandatorily for becoming a partner in Indian Limited Liability Partnership. Passport has to be duly notarized by the concerned authorities in the country of such foreign nationals & NRI, in addition, the Indian Embassy placed in that country can also authorize the documents. They have to submit proof of address also which will be a bank statement, driving license, residence card/any government-issued identity proof including the address.
Documents of LLP
- Proof Of Registered Office Address : Proof of registered office must be submitted during the LLP registration within 30 days of its incorporation. If the designated registered office is taken on rent, in that case, the rent agreement and a NOC- no objection certificate from the landlord must be submitted.
No objection certificate will act as the consent of the landlord to give permit the LLP to use the place as a ‘registered office’ and operate its business.
In addition, anyone document out of utility bills like electricity, gas, or telephone bill must be submitted along with the application. Those bills must contain the complete address of the located premise and owner’s name & the document shouldn’t be older than the past 2 months.
- Digital Signature Certificate : One of the designated partners of the LLP needs to opt for a DSC (digital signature certificate) as all documents & applications will be digitally signed by the concerned signatory.
Inclusions for LLP Registration
- Class 2 Digital Signatures – Two Nos
- Director Identification Number – Two Nos
- Reserve Unique Name (RUN) Approval – One Nos
- Incorporation Fee
- Stamp Duty
- Drafting of LLP Agreement
- Filing of Form 3 (LLP Agreement)
- Drafting of other relevant documents for the purpose of incorporation
- Issue of Certificate of Incorporation
- Income Tax – PAN & TAN
FAQs
What is the full form of LLP?
The full form of LLP is a Limited Liability Partnership.
What is Limited Liability Partnership?
LLP is an alternative corporate business form that it gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
What is the minimum number of partners required to start LLP?
A minimum two partners are required to start an LLP.
How to form/incorporate an LLP?
The procedure for formation of an LLP is very similar to that of a Private Limited Company incorporation procedure. A minimum of two Partners are required to start the LLP formation procedure and a registered office location is required within India. It is important to remember that FDI in LLP is allowed only with the prior approval of the Reserve Bank of India (RBI). Therefore, it is recommended that NRIs and Foreign National promoters opt to incorporate a Private Limited Company, where 100% FDI is allowed under the automatic route.
How can I get an LLP registered in India?
To register a Indian LLP, you need to first apply for a Designated Partner Identification Number (DPIN), which can be done by filing eForm for acquiring the DIN or DPIN. You would then need to acquire your Digital Signature Certificate and register the same on the portal. Thereafter, you need to get the LLP name approved by the Ministry. Once the LLP name is approved, you can register the LLP by filing the incorporation form.
What is the procedure for LLP registration in India?
LLP registration procedure is the easiest and transparent process as it has a blend of the benefits of a company and partnership firm namely, limited liability feature of a company and the flexibility of a Partnership firm. LLP registration process includes following steps:
- Get a digital signature (DSC)
- Apply for Director Identification Number (DIN)
- Get the name of the company approved through ‘Reserve your Unique Name’ service (RUN)
- Incorporation of LLP
- File ‘Limited Liability Partnership Agreement’
How can I convert my existing partnership firm into LLP?
Any existing partnership firm that is willing to get converted into LLP will need to apply through Form 17 (Application and statement for the conversion of a firm into LLP. Form 17 needs to be filed along with Form 2 (Incorporation document and Subscriber’s statement).
Who can become a partner in LLP?
Any individual or body corporate may be a partner in an LLP. However, an individual shall not be capable of becoming a partner of an LLP, if—
(a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
(b) he is an undischarged insolvent; or
(c) he has applied to be adjudicated as an insolvent and his application is pending.
What are the documents required for LLP registration?
To register an LLP in India, the following documents are required:
- PAN Card of the Partners
- Address Proof of the Partners
- Utility Bill of the proposed Registered Office of the LLP
- No-Objection Certificate from the Landlord
- Rental Agreement Copy between the LLP and the Landlord
When should I file my annual report with ROC of an LLP?
LLPs in India must file its Annual Return within 60 days from the end of close of financial year and Statement of Account & Solvency within 30 days from the end of six months of close of financial year. Unlike Companies, LLPs mandatorily have to maintain their financial year, as April 1st to March 31st. Therefore, LLP annual return is due on May 30th and the Statement of Account & Solvency is due on October 30th of each financial year. In addition to the MCA annual return, LLPs must also mandatorily file an income tax return every year.
What is the procedure for ROC annual filing of an LLP?
The procedure of ROC filing the annual return and annual accounts can be easily understood by the following process:
- Hold a Board Meeting to
- Authorize the auditor for the preparation of financial statements as per Schedule III of the Companies Act, 2013.
- Authorize the Director or Company Secretary for preparation of Board Report and Annual Return as per the Companies Act, 2013.
- Hold another Board Meeting for approving the draft financial statements, Board Report and Annual Return by the directors of the company.
- Conduct the Annual General meeting of the Company and pass the necessary resolutions. Please note that the financial statements are considered final only when the same is approved by the shareholders at the General Meeting.
Which is better LLP or Pvt Ltd Co?
Private Limited Company is the simplest and a very popular form of Business Registration in India. It can be registered with a minimum of two people. Limited liability protection to shareholders, ability to raise equity funds, separate legal entity status make it the most recommended type of business entity for millions of small and medium-sized businesses that are family owned or professionally managed.
Limited liability partnership is a partnership with limited liability. LLP is basically a combination of both Company and Partnership. It is an alternative form of business registration in India which is generally preferred by Professionals, medium and small scale business. Limited It is governed by LLP Act, 2008 and as per LLP agreement formed at the time of Incorporation.
What are the benefits of registering as LLP in India?
Here are some of the many benefits of registering as an LLP in India.
- An LLP is easier to start and manage and the process has fewer formalities
- It has a lesser cost of registration as compared to a Company
- LLP is like a corporate body having its existence other than its partners.
- LLP can be started with any amount of minimum capital
- In an LLP, each partner is not responsible or liable for another partner’s mischief or negligence.
- In an LLP, each partner is not responsible or liable for another partner’s mischief or negligence.
- No requirement of compulsory Audit
What is the procedure of closure of LLP in India?
In case the LLP wants to close down its business or where it is not carrying on any business operations for a period of one year or more, it can make an application to the Registrar of Companies for declaring the company as defunct and removing the name of the LLP from its register of LLP’s. The name of LLP can be struck off by the registrar or by the LLP in e-Form 24 with the consent of all partners.
On receiving the application, the registrar would send a notice to the Limited Liability Partnership and all its partners, of his intention to remove the name of the LLP from the register and requesting them to send their representations along with copies of the relevant documents, if any, within a period of 30 days from the date of the notice.
On completion of the time mentioned in the notice, if there are no adverse representations from LLP partners or general public, the registrar could if satisfied, strike off the LLP name from the register and publish a notice in the official gazette.
For an LLP partnership agreement in India, can we use a stamp paper bought in the name of an incorporated LLP (not in the name of designated partners)?
For an LLP agreement in India, The stamp paper should be bought in the name of an LLP only. However, The agreement should be signed by all the partners to express the consent for all the terms and conditions mentioned in the LLP agreement.
Is it allowed by the CA Act 1949 to form LLP and practice?
Yes, A Chartered Accountant can practice as CA and form an LLP.
However, All members of ICAI in practice who want to constitute separate LLPs are required to follow the provisions of the Limited Liability Partnership Act, 2008
What is meant by “liability of the partners is limited to their agreed contribution in the LLP” in LLP?
An LLP is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Since liability of the partners is limited to their agreed contribution in the LLP. Hence, the creditors of the limited liability partnership are not the creditors of individual partners.
What is the difference between partner and designated partner at LLP in India?
Designated partner are like Director and partners are like shareholders.
The liability of the Partner is limited solely to Partnership Agreement. The Designated Partners are responsible towards the day to day functioning , liabilities prescribed by LLP Agreement as well as for all penalties imposed on Limited Liability Partners for contravention of any provisions applicable and to be complied with by the LLP.
How do I close a current account of LLP?
Before closing a current account of an LLP, you need to make sure that there is no assets and balance lying in the bank account.
Once there is no balance or assets in the bank account, the designated partners need to approach the banker with a request for closure and obtain a closure certificate from the bank that the account maintained with them has been closed which acts as a proof for closure of the bank account in the name of LLP.
If you want to get started with LLP Registration, reach out to Chartered Accountants from Moneyम्जी ‘s homepage
