LIMITED LIABILITY PARTNERSHIP
LLP stands for Limited liability Partnership. It encompasses and merge the benefit and features of both the Company and Partnership Firm. Like Company its partners are having limited Liability and like partnership firm it is carried out by its partner. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its name.
LLP REGISTRATION process is simple and flexible and easy to controll the business operation in accordance with the LLP agreement whilst enjoying the limited liability status compared to a company which is subject to strict MCA compliance requirements under the Companies Act 2013 in most of its affairs. The merit 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.
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.
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.
Partner’s liability is limited to the agreed contribution.
DOCUMENTS REQUIRED FOR LLP REGISTRATION
Passport size Photograph
Identity proof (PAN CARD/ VOTER ID CARD/DRIVING LICENSE)
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)
NOC (If consented)
PROCEDURE FOR LLP REGISTRATION :-
1.First step is to file an e-form accompanied by such fees as may be prescribed for the name approval of the proposed LLP to the Ministry of corporate affairs .Maximum 2 names can be given in the form. Every LLP shall have “LIMITED LIABILITY PARTNERSHIP” or the abbreviation “LLP” in its name. The form is approved by the central registration centre (CRC) within 2-3 working days. This name shall be reserved for a period of three months from the date of intimation by the registrar. The name may be rejected by CRC if the names are undesirable or identical to any other existing LLP.
2. As soon as the name gets approved than the e form named FILLIP is downloaded and 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
Address Proof (Bank Statement/Mobile Bill/Telephone Bill)
Copy of Rent agreement (if rented)
If owned by others than NOC
This form usually 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 LLP REGISTRATION ONLINE
All the Designated partners and other partners shall have DPIN and DSC
There should be Minimum 2 Designated Partners for the registration of LLP
There should be some amount as contribution
At-least one of the Designated Partner out of two should be Indian resident
The Registered office should be situated in India.
The partners shall enter in to a LLP Agreement.
MANDATORY COMPLIANCES OF 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
If any LLP fails to comply with the above stated compliances the LLP shall be punished with a fine of Rs. 25000 but which may extend to Rs. 5 lacs and every designated partner of such LLP shall be punishable with Fine of Rs. 10000 which may extend to Rs. 1 lac.
CONVERSION INTO LIMITED LIABILITY PARTNERSHIP
Entities like firms, private company including one person company and unlisted public company may convert into a Limited Liability Partnership in accordance of the relevant provisions and schedule of this act.
The Registrar after satisfying itself that the firm,or private company or unlisted public company has complied with all the necessary provisions, scheduled and rules as stated by the central government, register the said entity as a Limited Liability partnership and issue a fresh certificate of incorporation.
The converting firm, private company or unlisted public company shall Inform the concerned registrar of firms or registrar of companies as the case may be with which it was registered within 15 days of conversion, about the conversion and details of limited liability partnership.
The partners of the firm, shareholder of the private company or unlisted public company now shall be governed by the provisions of Limited Liability Partnership act,2008.
WHICH IS BETTER, LLP OR PVT LTD COMPANY?
Pvt. Ltd Company is company with the following features:
Having minimum of two members and maximum 200 members with liability
Having perpetual succession and common seal
Cannot issue its shares to the public
On the other hand a LLP is a partnership with limited liability. It is a combination of Company and Partnership and is governed by a separate act and terms are mentioned in a agreement which are flexible as compared to rigid rules and regulations of the companies act, 2013.
Thus in my opinion LLP is easy to incorporate as it requires less compliance than Pvt. Ltd Company.
CLOSURE OF LLP
The winding up of LLP may be voluntary or directed by the tribunal
The pre-requisite to close LLP is that it cease all the commercial activity for minimum one year. LLP can be closed online. Form 24 is used for the closure of LLP. This form is available online on mca.
Step1: Cease Commercial Activity
Step 2: Take consent from all designated partners.
Step3: Close Bank Account(s)
Step4: Prepare Affidavits & Declaration
Step 5: Prepare Documents
Step 6: File Any Pending Documents.
Step 7: Obtain Chartered Accountant Certificate.
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