Limited Liability Registration (LLP) Registration in India
Limited Liability Registration (LLP) Registration in India
In India, the concept of Limited Liability Partnership (LLP) was introduced in 2008 through the LLP Act. LLP has become a popular choice for businesses because it combines the limited liability protection of a Private Company with the flexibility of a Partnership. In an LLP, no partner is responsible for the wrongdoings or actions of another partner, providing protection from joint liability. LLPs are often preferred by professionals and small businesses, especially family-owned or closely held ones. In 2022, the Ministry of Corporate Affairs (MCA) made the LLP registration process even easier and more transparent by introducing digital forms for registration. Now, LLPs are also given their PAN and TAN along with the Certificate of Incorporation.
What is a “Limited Liability Partnership” or “LLP”?
A Limited Liability Partnership (LLP) has become a popular choice for entrepreneurs in India due to its unique advantages. An LLP combines the benefits of both a Company and a Partnership Firm. It is a type of business organization where at least two partners come together and sign an LLP agreement to establish the firm. One of the key features of an LLP is that it provides limited liability protection to its partners. This means that the personal assets of partners are protected from the business’s debts or liabilities. Unlike in a traditional partnership, where partners are jointly liable for the firm’s debts, in an LLP, each partner’s liability is limited to their contribution to the business. Additionally, an LLP enjoys perpetual succession, meaning it continues to exist even if a partner leaves or passes away, similar to a company. This provides stability and continuity to the business. LLPs are commonly chosen by professionals, small businesses, and family-owned companies. They offer flexibility in management and taxation, with fewer formalities compared to a private limited company, making it an attractive option for entrepreneurs looking for a combination of liability protection and operational freedom.
What are the Features of an LLP in India?
The following are the features of an LLP in India:
An LLP (Limited Liability Partnership) is a legal entity that is separate from its members. The partners’ liability is limited to their agreed contribution to the business. It combines the flexibility of a partnership with the limited liability protection of a company.
One of the advantages of an LLP is that it has perpetual succession, meaning it continues to exist even if a partner leaves or passes away, as long as there are at least two partners.
LLPs have fewer compliance requirements compared to companies, and there’s no need for a minimum capital contribution. However, they must still meet accounting and filing obligations similar to a company. At least one partner must be a resident of India, and there is no upper limit on the number of partners.
Overall, an LLP provides a good balance of flexibility, limited liability protection, and ease of operation for entrepreneurs and small businesses.
Benefits of LLP Registration in India
The following are the benefits of LLP Registration in India:
-
Low Cost and Less Compliance: Setting up an LLP is cheaper compared to registering a Private or Public Limited Company. The compliance requirements are also minimal, as the LLP only needs to file two statements each year—an Annual Return and a Statement of Accounts and Solvency.
-
Limited Liability: In an LLP, the partners' liability is limited to the amount they contribute to the business. This means that if the business faces losses or goes bankrupt, partners are not personally liable beyond their agreed contribution. Plus, one partner is not responsible for another partner’s mistakes or misconduct.
-
Separate Legal Existence: An LLP is treated as a separate entity, just like a company. It can enter into contracts, sue or be sued, and operate in its own name. This increases trust and confidence from customers, suppliers, and other stakeholders.
-
Tax Benefits: LLPs enjoy tax benefits such as exemptions from Dividend Distribution Tax (DDT) and Minimum Alternative Tax (MAT). The tax rate on an LLP is also lower than that of a company.
-
No Minimum Capital: There is no requirement for a minimum capital contribution to form an LLP. It can be started with a small amount, even as low as Rs. 2000.
What are the Different Types of LLP Forms in India?
Following is the list of all types of LLP Forms in India:
-
FiLLiP Form: This form is used to register and incorporate an LLP in India.
-
Run LLP: This form is used to reserve a name for the LLP before registration.
-
Form 3: This form contains details about the LLP Agreement between the partners.
-
Form 8: This form is used to submit the Statement of Account and Solvency, showing the financial status of the LLP.
-
Form 11: This form is used to file the annual return of the LLP, updating its status and activities.
-
Form 24: This form is used to apply to the Registrar of Companies (ROC) to strike off or close an LLP's name from the records.
What are the vital documents required for LLP Registration in India?
-
Proof of Identity: A government-issued ID like Aadhaar card, passport, or voter ID of all partners.
-
Proof of Address: A recent utility bill (like electricity or water bill) or bank statement of all partners, showing their current address.
-
Photographs: Passport-sized photographs of all the partners.
-
LLP Agreement: A document that outlines the terms and conditions between the partners.
-
Proof of Business Address: If the LLP has a registered office, a rental agreement or ownership proof (like a sale deed) is required.
-
Digital Signature Certificate (DSC): DSC for the designated partners to sign the forms electronically.
-
Director Identification Number (DIN): DIN for all the partners who are designated as directors.
Proof of Registered Office Address:
If the registered office of the LLP is rented, you need to submit:
-
NOC (No Objection Certificate): A letter from the landlord allowing the LLP to use the property as its registered office.
-
Rent Agreement: A signed agreement between the landlord and the LLP.
Know the LLP Registration Process
Following is the step-by-step procedure for LLP Registration in India
1: Obtain DSC:
Before starting the LLP registration process, the designated partners must apply for a Digital Signature Certificate (DSC). This certificate is needed to sign the required documents online. The DSC must be obtained from a government-approved certifying agency.
2: Get DIN
After obtaining DSC, then you need to apply for DPIN of all the proposed Partners or those wanting to be designated Partner of LLP. The application for the allotment of DIN has to be made in Form DIR-3
3: Application for Name Approval
LLP-RUN application form is for the name reservation of the Limited Liability Partnership. But before applying for the name reservation, it is necessary to use the free name search facility on MCA Portal. The system will provide the list of closely resembling names of existing companies/LLPs based on the search criteria. This will definitely help you choose names not identical to already registered names. The Registrar will approve the proposed name only if the name is not undesirable in the Central Government’s opinion & doesn’t resemble any existing Partnership Firm or an LLP or a body corporate or a Trademark.
4: Filing FiLLiP Form
For the LLP Registration in India, you need to file a FiLLiP Form and submit it to the Registrar who has jurisdiction over the State in which the registered office of the LLP is situated. The Form will be an integrated form. This Form is also used for allotment of DPIN, if a person who is to be appointed as a designated partner doesn’t have a DPIN or DIN. The application for reservation may be made via FiLLiP too. In case the name is approved, the name shall be filled as the proposed name of the Limited Liability Partnership.
5: File LLP Agreement
This Agreement governs the mutual rights & duties amongst the Partners & also between the LLP & its Partners. LLP Agreement must be filed in Form-3 online, Form-3 for the LLP Agreement must be filed within 30 days of the Incorporation. This Agreement has to be printed on stamp paper. The value of Stamp Paper is different for every state.
6: Apply for PAN, TAN, and Open a Bank Account
Once you get the Certificate of Incorporation we will apply for the PAN, TAN and Bank Account for your Limited Liability Partnership.