FAQ about Incorporating Limited Liability Partnership (LLP)
What is a Limited Liability Partnership?
LLP is a hybrid version of a partnership firm and company. As a name refers, it is a partnership some or all partners have limited liabilities, unlike other partnerships. In an LLP, each partner is not responsible or liable for another person misconduct. It is an alternative corporate business form that gives benefits of liabilities and flexibility of a partnership. This partnership is governed by the Ministry of Corporate Affairs. Further, it has perpetual succession.
What are the benefits of an LLP Registration?
Due to its flexibility and dynamic structure it comes with many benefits that are listed below;
• LLP registration process is simple and quick.
• One of the biggest benefits of LLP is that limited legal liability and the flexible management role. Unlike, general partnerships, personal assets of the partners are secure and the partners will not be indefinitely liable for the amount.
• An LLP has an extremely flexible management role for the partners. Each partner role will be demonstrated on the agreement to reduce the ambiguity. Along with that, each partner has a right to choose how much management that they want.
• Another big benefit of LLP registration is that pass through tax such that It avoid double taxation.
• The minimum members are required to form an LLP is only two.
What are the minimum requirements for an LLP registration?
To form an LLP, there must be two members, in which one director must be Indian and a real person. Also, there is a requirement to have a business address in India so as to register it has registered office for your LLP.
How can I create a Limited Liability Partnership?
Formation of limited liability partnership is done through a state. Each state has different rules for the LLP registration. The most common steps for the LLP registration are listed below.
• Application for a digital identification number.
• Reservation of LLP name.
• Filing of incorporation form along with DIN application.
• Application for PAN and TAN.
• Filing of LLP agreement.
There is an online LLP registration process and it is registered with MCA. At the time of incorporation, stamp duty has to be paid. In the event, if you feel difficulty while the incorporation of LLP, you can contact us. We will help you regarding LLP registration.
Who can be partners?
In LLP, a minimum of two partners is required i.e director partner and partner. At least one of the designated partners must be resident of India. To become a designated partner DIN is mandatory. A body corporate can also become a partner of LLP. Following partners cannot be a director or member of LLP.
• Undischarged bankrupt.
• Persons disqualified from acting as directors.
• If an application for adjudication of insolvency is pending.
What is the difference between a designated partner and partner?
The key difference between designated partner and partner is that designated partner is more liable than the partners. They have a responsibility to handle day to day business activities and manage legal compliances. Further, the rights and responsibilities of the partners are demonstrated on the LLP agreement.
What is the director identification number?
DIN is a unique number which is given to an individual to become a designated partner in LLP. If a person carries a DIN then he can become a designated partner in a firm easily. Otherwise, this number is allotted by the MCA at the time of incorporation of an LLP. Following documents are required for the DIN application.
• Identity Proof such as Aadhaar card/ Passport/ Election card/ Driving License.
• Address Proof latest bank statement/ utility bill.
What is a digital signature certificate?
A digital signature certificate is a secure digital key issued by the certified authorities that holding the authenticity of the designated partners. Any form filed for incorporation of limited liability partnership in India online shall be submitted after affixing the DSC of the designated partner.
Which documents are required for LLP registration?
• PAN card/ Electricity bill/ ID proofs of partners.
• Address proof of the partners.
• Residents proof of the partners.
• Foreign Nationals partners have to submit passports as proof.
Documents of LLP:
• Proof of registered office address.
• Digital signature certificate.
What is the process of LLP registration?
Following are the steps of Limited Liability Partnerships Registration.
• Digital Signature: This is the first step in which directors of the LLP have to fill an application form for digital signature.
• Digital Identification Number: After applying for digital signature, now they have to apply for a digital identification number.
• Name Approval: Once you applied for digital signature and digital identification number you to provide two names of companies at MCA portal
• Incorporation for LLP: Form-2 is the application for the incorporation of the LLP.
• File Limited Liability Partnership Agreement: LLP agreement is filled in Form-3 on the MCA portal.
How to reserve the name for an LLP?
Reserving the name for an LLP is an important process. The MCA has simplified this process by introducing a new simple web-application called Reserve Unique Name. The partner can provide 2 names in preferable order. The register may ask you to re-submit the application, in the event if they found the names you have submitted are not falling in their criteria of uniqueness.
Whether LLP can be registered for non-profit activities?
No, LLP is an only for-profit business. Therefore LLP registration cannot be incorporated for undertaking “Not-for-Profit” activities.
Can I add or remove partners?
Yes, you have full liability to add and remove partners. But, you have to follow a specific procedure. Like if a partner doesn’t have DIN so before entering him to a business avail the request for DIN.
Can an existing partnership firm be converted into an LLP?
Yes, an existing partnership firm can be converted into an LLP easily. And there assets and liabilities are also converted.
How I can close my LLP?
There are two methods for closing an LLP. First by declaring an LLP as a defunct and second voluntary winding up.
If you are looking for the incorporation of an LLP. Get in touch with us. At Unilex Business consultants, we will guide you and help you regarding LLP registration process and other related legal formalities.