What is Limited Liability Partnership (LLP)?
Limited Liability Partnership (LLP) is business form which provides benefits of limited liability and flexibility of a partnership business. Compliance requirement is less in LLP as compared to company form of business structure. Audit is exempted up to certain level of turnover in case of LLP. Minimum two people can form an LLP. There is no maximum limit on the number of its partners. This is preferred choice for small businesses and instead of general partnership.
What are eligibility criteria to start a LLP?
- Minimum Two People: Two people are needed to register the LLP. However, there is no limit on maximum partners.
- No Minimum Capital: Capital in case of LLP is depending on the need of the business and contribution to partnership by partners. The Stamp Duty on the deed is based on the amount of capital.
- Resident Person requirement: One Designated partner of LLP must be from India.
- Unique Name: Name of the LLP should be unique, and it must not be same or similar to the name of any existing company, LLP or trademark which is registered or applied for.
What are documents required for LLP registration?
- Latest passport size Photographs of all partners
- PAN ( Permanent Account Number) of all Partners (Minimum 2)
- Identity Proof of each partner, (Aadhar Card, Passport, Driving License or Voter ID Card)
- Address Proof of all partners (Bank Statement or Passbook, electricity bill, telephone bill, Aadhar card or any utility bill)
- Copy of Mobile bill, telephone bill, electricity bill or Bank Statement of all Partners with Present address
- Registered Office Address Proof – Electricty Bill along with Rent Agreement / ownership proof of proposed registered office.
- Stamp paper for LLP Agreement of State where LLP is to be Incorporated
- Documents Must be self attested
What are advantage of LLP registration?
- Limited Liability: Partners’ liability of the LLP is limited and it is limited only to their contribution by them to the LLP.
- Separate Legal Entity: LLP is a separate legal entity and a juristic person distinct from its partners and both can sue each other and be sued.
- Continuity of existence of the LLP: LLP continue to exist even after the death of the partner.
- Minimal regulatory compliance: Regulatory compliance are very less in case of LLP as compared to company form of entity.
- Property Ownership: LLP enjoys the right to own, enjoy and transfer property. The rights can be exercised by the LLP in its own name.
- No Audit Requirement: There is no audit requirement up to turnover of less than 40 Lakhs and capital contribution of less than 25 Lakh.
- Transferability of ownership: The ownership of a LLP can be easily transferred to another person. However, transferee should be inducted as a Designated Partner of the LLP.
- Taxation: Both Partners & LLP can give loan to each other. There is no dividend tax in case of LLP.
What are procedure of LLP registration?
- Issue of Digital Signature Certificate (DSC): DSC is necessary to sign the e-application for registration of LLP. Photo, ID and Address proof is required with DSC form for DSC issuance.
- Name Approval: Name approval of LLP is required for application for registration of LLP. Name of LLP should be unique and should not be similar to the existing or applied company, LLP or trademark. In Form LLP_FiLLiP (eForm-2) name approval can be applied simultaneously with application for LLP registration.
- Registration Certificate of LLP: After DSC, Name approval or
LLP_FiLLiP (eForm-2) incorporation documents are submitted to MCA for registration of LLP, the Registrar issue the certificate of incorporation after his/her satisfaction. If Partners already have approved DPIN then that will be used and if Partners do not have approved DPIN then DPIN will be approved simultaneously with Registration of LLP.
- LLP Agreement filing with Registrar: After incorporation of LLP, the partners of the LLP must enter into a LLP Agreement and file it with the ROC within 30 days of Incorporation. Non submission of LLP Agreement incurs a penalty of Rs. 100 for each day of delay.
- Application for PAN & TAN of LLP: PAN & TAN is required to be taken for smooth running of the business.
- Bank Account opening Support: A LLP must have a current account in its business name, to do the transaction of business.