Limited Liability Partnership Registration
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What is Limited Liability Partnership (LLP)?
Limited Liability Partnership, popularly known as LLP is an alternative business vehicle to carry out business which combines the characteristics of a private company and a conventional partnership. Formation of Limited Liability Partnership (LLP) provides limited liability status to its partners and offers the flexibility of internal arrangement through an agreement between the partners. This combination will give entrepreneurs and businessmen a more structured business vehicle compared to a sole proprietorship or a conventional partnership. LLP registration provides the flexibility of controlling the business operation in accordance with the partnership agreement whilst enjoying the limited liability status compared to a company which is subject to strict compliance requirements under the Companies Act 2013 in most of its affairs. The major advantage of setting up a Limited Liability Partnership (LLP) in India is that it has a separate legal entity from its partners and combines the advantages of both the Company and Partnership into a single form of organization. In Limited Liability Partnership (LLP) registration, one partner is not responsible or liable for another partner’s misconduct or negligence, this is an important difference from that of a unlimited partnership.
Formation of a Limited Liability Partnership (LLP) offers simple and flexible procedures in terms of formation and management and has less number of compliances in comparison to other entities. In an LLP, 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. Limited Liability Partnership is managed as per the LLP Agreement, however in the absence of such agreement the LLP would be governed by the framework provided under Limited Liability Partnership Act, 2008. Limited Liability Partnership registration (LLP) process is less complex than other form of business.
Unilex being the professionally managed firm provides Limited Liability Partnership (LLP) registration online within 15 working days, subject to government processing time. Our professionals help in estimating the cost of Limited Liability Partnership (LLP), document required for Limited Liability Partnership (LLP) and hassle free procedure for Limited Liability Partnership (LLP) registration.
Advantages of LLP Registration
As Compared to partnership,there is no restriction on maximum number partners,the only requirement is of having minimum number of partners which is 2
Flexible to Manage
Partner can decide the way they want to run and manage the LLP, in form of LLP Agreement. The LLP Act to large extent rather than allows partners the liberty to manage it as per their will and fancies..
The greatest benefit of formation of LLP is limited liability of its partners.Partners of the LLP shall only be liable to the extent of their Capital contribution.
LLP enjoys various tax advantages and can claim various expenses like Salary to Directors, Professional Fees, Audit fees, Rent and Depreciation on its Assets.
Continuity of Existence
Limited Liability Partnerships (LLP) enjoy permanent succession just like a Limited Company as it is a separate legal entity in the eyes of Law.
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.
Documents For LLP Registration
- Passport size Photograph
- Copy of PAN card
- Copy of Aadhar Card
- Address Proof (Bank Statement/Mobile Bill/Telephone Bill)
For Registered Office
- Copy of Electricity Bill
- Sale Deed (if owned)
- Copy of rent agreement (if rented)
Salient Features of Limited Liability Partnership (LLP)
- LLP is treated as body corporate and has separate legal identity from its partners (separate legal entity).
- LLP has perpetual succession just like a company.
- Rights and liabilities of LLP will not change consequently in change of relations between the partners.
- LLP in its own name can hold properties and enter into contracts.
- Partners liability is limited to the agreed contribution.
Mandatory Requirements for Limited Liability Partnership (LLP) Registration
- DPIN and DSC of all the Directors
- Minimum 2 Designated Partners
- There should be some amount as contribution
- Atleast one Indian resident Designated Partner out of two.
- Registered office address in India
- Execution of LLP agreement between the partners
Cost Of LLP Registration
|TAN & PAN Fees||180|
New guidelines for selecting the name of a Limited Liability Partnership (LLP)
- Name and object of the company could differ entirely and not necessarily to be in consonance with each other.
- Promoter can keep Company name on their initials and the same could be abbreviated.
- No need to change company name in case of business activity change.
- No need to obtain any sort of NOC whose name is being used in Company’s name.
Important clauses of a LLP agreement
As the LLP agreement is the governing document, therefore utmost care must be taken while drafting it, and one has to take help of a expert lawyer in order to avoid future disputes between the partners, one has to make sure to include the following below mentioned points:
- Commencement and duration of LLP
- Contribution and profit sharing of each partner
- Powers, duties and authorities of each partners
- Other points such as admission, expulsion, retirement, remuneration of partners.
Procedure For Registering A LLP
Obtaining The DSC and DPIN(1-2 Working Day)
- Initially DSC and DPIN is required to be obtained for the Partners of the proposed LLP. It can be obtained within 1-2 working days.
Application for Name approval(3-4 Working Day)
- After obtaining the DSC and DPIN of the proposed partners, our team will get in touch for a unique name and make a application for the name approval.
Document Submission(2-3 Working Day)
- After name approval of proposed LLP, we shall prepare a LLP agreement and and shall file it to the Registrar. After review Registrar shall register the LLP.
Mandatory Compliances of a Limited Liability Partnership (LLP) every year
- Form 8- Statement of accounts on or before 30th, October every year
- Form 11-Annual return on or before 31st, march every year
- Statutory audit by a chartered accountant above turnover Rs 40 lac or contribution Rs 25 lac
- Filing of ITR
Partnership Registration vs Private Limited Company vs LLP-which business form to choose
For any startup or Entrepreneur, it is the most crucial decision as to which form of entity they should register in India to do business. Here we have drafted some of the important points based on various factors to help you out in your decision making process:
|S. No.||Particulars||Partnership||Private Limited||LLP|
|1||Foreign Participation||Foreign National cannot be the partners in a Partnership firm.||Foreign national can be a member in a Company.||Foreign National can be a partner in a LLP.|
|2||Tax Liability||Taxed at|
a rate of 30% plus
a rate of 30% plus Surcharged
a rate of 30% plus
|3||Transfer of Shares||Not Applicable||Ownership is easily transferable by the way of transfer of shares.||Transfer are governed by the LLP agreement.|
|4||Annual Filing||No return is required to be filed||Returns is required to be filed with ROC every year.||Returns is required to be filed every year.|
|5||Audit of accounts||Required to have tax audit of their accounts||Required to get their accounts audited annually||Having turnover less than 40lacs or contribution less than 25 lac in financial year required to get their accounts audited annually.|
|6||Rights/Duties/ Rights/Duties/ obligation of the partners/Managing Partners/ Directors||Governed by Partnership deed||Governed by AOA and resolutions passed by shareholders or Directors||Governed by LLP agreement.|
|7||Registration||Registration is optional||Registration with ROC is required.||Registration with ROC is required.|
|8||Cost of formation||Nominal cost of creating a firm||Minimum government fee for incorporation of private company is 6,000-7,000 approx/-||The cost of formation of LLP is lesser than the formation of company.|
FAQ’s On LLP Registration
How can an existing partner cease to be a partner of an LLP?
Person may cease to be a partner of a limited liability partnership in accordance with an agreement with the other partners or, in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner.So, stepping down of a designated partner will either be in accordance with the LLP agreement signed during the incorporation of the company or by giving a notice, whose specimen is given in Form 13of LLP Rules, 2009, to other partners.
How can a person become a partner of an LLP?
Persons, who subscribed to the “Incorporation Document” at the time of incorporation of LLP, shall be partners of LLP. Subsequent to incorporation, new partners can be admitted in the LLP as per conditions and requirements of LLP Agreement.
What will be the obligation of a partner in case he changes his name or address?
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.
Whether every LLP would be required to maintain and file accounts?
An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A “Statement of Accounts and Solvency” in prescribed form shall be filed by every LLP with the Registrar every year.
Which documents will be available for public inspection in the office of Registrar?
The following documents information will be available for inspection by any person:- Incorporation document, Names of partners and changes, if any, made therein, Statement of Account and Solvency Annual Return The manner and fees for such inspection shall be prescribed in the rules.
Whether audit of all LLPs would be mandatory?
Audit of LLPs shall be mandatory. However a more simplified compliance regime for small LLPs is being proposed by exempting such LLPs from the requirement of audit by exemption through notification by the Central Government.
Whether two LLPs would be allowed to merge?
Provisions of clauses 60 to 62 of the Act provide for the manner in which compromises or arrangements including mergers and amalgamations involving LLPs shall be allowed.
Whether any Annual Return would be required to be filed by an LLP?
Every LLP would be required to file with ROC, every year, an Annual Return, contents of which would be prescribed under rules.
What would be the provisions in respect of winding- up of LLPs?
It is proposed to provide the provisions and procedures required to be complied with when the affairs of an LLP are to be wound-up and dissolved, by enabling the Central Government to make rules under the LLP Act, 2008.
What is the legal status of an LLP?
An LLP is a separate entity with the legal status of a body corporate
Can a charity organization register as LLP?
No. LLP is intended only for businesses with a view to make profit.
Is there any restriction as to what kind of business can use LLP as a business vehicle?
No. It is for all kind of lawful businesses with a view to make profit