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.
SALIENT FEATURES OF LIMITED LIABLITY 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.
DOCUMENTS REQUIRED FOR LIMITED LIABILITY PARTNERSHIP (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)
PROCEDURE FOR REGISTRATION OF LIMITED LIABILITY PARTNERSHIP (LLP)
1.Firstly e-form named LLP-1 is filed with the Ministry of Corporate Affairs (MCA) for name approval. Maximum 6 names can be given in the form. The form is approved by the MCA within 4-5 working days.
2.As soon as the name gets approved than e form named LLP-2 is filed for the incorporation of the LLP with the following attachments:
- PAN and Aadhar Card of all the partners and Designated Partners
- Consent to act as Designated Partners or partner
- Subscriber sheet
- Address Proof (Bank Statement/Mobile Bill/Telephone Bill)
- Copy of Rent agreement (if rented)
- If owned by others than NOC
This form gets approved within 7-8 working days.
3.Once the LLP gets incorporated, a LLP agreement needs to be drafted and duly notarized has to be filed within 30 days of the incorporation in e-form LLP-3.
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
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