Limited Liability Partnership (LLP) is a type of partnership that can be found in any type of business venture, in which each of the participants has only a small amount of liability. This means that no one partner is accountable for the loss, negligence, or misconduct of the other partners. Because all partners share the responsibility of a small amount, but not all This is referred to as Limited Liability Partnership. As opposed to shareholders, the partners also have the power to oversee the business, too. Due to these attributes, it is possible to say that LLPs appear to exhibit the characteristics that are shared by corporations and partnerships.
Process of Registration as New LLP
The process of registering as the formation of an LLP is a fairly simple procedure that can be summated into a few steps, as described below:
Step 1: Getting Digital Signature Certificate (DSC)
The first step to registering an LLP is to get the electronic signature of all named members in the LLP. The digital signature is necessary as the documents of the LLP are stored online. The documents are signed digitally which aids in getting a certification.
Digital signatures are required and can be obtained through recognized government agencies, like National Informatics Center, IDRBT Certifying Authority, E-MUDHRA, CDAC, and NSDL. The cost to obtain the DSC will depend on the certifying agency to which applicants have applied.
Step 2: Reserving the Name
In order to establish a proposed LLP the applicant has to obtain an LLC-Reserve Unique Name (LLP-RUN) that is processed by the Central Registration Centre. Before using the name or quoting the name, it is always recommended to look up the Ministry of Corporate Affairs (MCA) website for a free name. This will show an inventory of companies that have similar or identical names as the proposed LLP. After the name is chosen, the registrar must accept the name that isn’t too like any other LLP. The LLP-RUN must be filed with a fee and is then subject to acceptance by the registry.
Step 3: Incorporation of LLP
The form to incorporate a Limited Liability Partnership (FiLLiP) must be filled out and filed with the registrar to incorporate an LLP. Fees must be paid according to Annexure ‘A’. Allotment applications are allowed to be submitted by two persons only.
Step 4: File Limited Liability Partnership Agreement
The agreement regulates the mutual rights and obligations of the parties. The agreement is filled out in form 3 online through the MCA Portal. As of the date of incorporation, Form 3 of an LLP agreement must file within 30 calendar days. LLP Agreement must be created in Stamp Paper, wherein every state has its own stamp paper.
It takes about 15 days for the receipt of DSC along with Form 3 depending on the availability of all the required documents.
Documents Required for LLP Registration
The documents needed to create your LLP are similar to those that are required for the majority of businesses. There are however two sets of documents that need to be filed to register your LLP formation i.e. documents needed by partners and those required by partners. LLP documents.
Documents of Partners
Each partner in the LLP must complete the following forms:
- Identification proofs and PAN cards of all the parties.
- Address Proofs of Partners which include voter ID, passports, or driving licenses.
- A passport-size photo set on white background.
- Passports of NRIs as well as foreign nationals who want to join an LLP.
Documents of LLP
Documents pertaining to the LLP entity that needs to be submitted on a regular basis include:
- A certificate of the registered office address is required to be presented when registering or within a period of 30 days following the inception of the LLP. If your registered office happens to be a facility that is rented An NOC from the property owner is required. In addition, at least one proof of residency must be submitted like utility bills that aren’t more than two months old.
- A Digital Signature Certificate (DSC)
The cost of LLP registration
Learn more about the fees for registration:
DSC – Around Rs. 1500-2000 per partner for 2 people
Name Reservation – Rs. 200
Incorporation is contingent on capital contribution
Contribution up to Rs. 1 lakh up to Rs. 500 & Contribution between Rs. 1-5 lakh (Rs. 2000
LLP Agreement is based on the capital contribution.
Contribution of up to Rs. 1 lakh – 50 to file Form 3 along with stamp duty on the state in which LLP is formed.
Limited Liability Partnerships in India
They are based on the Limited Liability Partnership Act of 2008. It was based on the Limited Liability Partnership Act of 2008. Limited Liabilities Partnership Act 2008 was published in full on the 9th day of January 2009, in the Official Gazette of India, and has been in effect since the 31st of March 2009. The rules governing the act were published on April 1st, 2009. The act was amended in the year 2017. The formal incorporation of the LLP was completed on April 2 in 2009. The incorporation of an LLP is a popular choice for entrepreneurs because the cost of creating an LLP is low as it does not have a minimum capital requirement and there are very few compliance rules in comparison to other types of business ventures. As with many entrepreneurs who want to join an LLP or establish it with the help of a wide range of business loans that can assist you in starting your own business or for expansion of your business.
Benefits of obtaining LLP Registration
- Limited Liability Limited Liability: The responsibility of the participants is not unlimited and limitable to the amount they contributed
- It is possible to transfer LLP to a different person from the previous
- No audit is required for the amount of turnover that is less than. 40 lakh or the amount of Rs. 25 lakh capital contribution
- LLP is able to acquire and sell property, and this transfer can be made in its own name.
- The existence of the LLP is being contemplated even after the death of any of the partners
- LLP is a legal entity. Both the partner and the juristic individual who is not a part of the partnership is able to sue each other or sue each other
- No dividend tax is due in the event of an LLP
Eligibility Criteria for obtaining LLP Registration
- The minimum age to join the LLP 18 is old however, anyone who is younger than 18 is able to join too.
- Two people are needed to establish an LLP
- There is no maximum number of partners
- No minimum capital is required for the start of an LLP other than stamp duty
- One should be an Indian resident
- Name Uniqueness is a must in an LLP
- Names should not be similar to a company that is already in existence.
What are the reasons why business people choose LLP in place of Partnership Registration?
- LLP is a distinct legal entity, while the partnership firm is a separate legal entity. The partnership firm’s partner’s liability is only limited to their contributions. The liability of a partnership is not restricted.
- LLP formation requires two designated partners. In a partnership, the maximum capping is 50 partners
- LLP registration is compulsory and is conducted by the Ministry of Corporate Affairs, however, Partnership companies are registered with the Registrar of Firms
- The name of the LLP should be unique and shouldn’t be distinct from any other name, but there’s no limitation on using the name in Partnership
- An LLP’s reputation is more trustworthy. LLP is greater than the credibility of the Partnership firm
FAQs
Q. How long does it take to sign up as an LLP?
Ans. The average time to register an LLP is about 15 days.
Q. What is the cost to become an LLP?
Ans. The registration process to become an LLP costs as low as 2500 to Rs. 2500 – Rs. 6000 based on how many partners as well as their capital investment.
Q. What are the rules on the minimal and maximum members within an LLP?
Ans. The minimum number of shareholders needed to establish an LLP is two, and it is not limited to the number of partners. For partnerships, the minimum number of partners is two, but the maximum number of partners can be up to 50.
Q. If a body corporate can be a member of an LLP?
Ans. Yes anyone, whether an individual or a corporate body may be a partner in an LLP.
Q. What are the prerequisites for being an associate?
Ans. Anyone who is educated and skilled enough to be able to contract can be an associate. There are no formal qualifications required.
Q. What are the rules regarding “Designated Partners”?
Ans. It is essential to have at least two Designated Members designated to create an LLP. Designated Partners are primarily accountable for compliance with legal and regulatory requirements as well as accountable for their responsibilities as “partners per-use”.
Q. Who can be a “Designated Partner”?
Ans. Any two persons who reside in India or who are partners in an LLP as well as nominees to corporate bodies are deemed to be designated Partners.
