Overview of Limited Liability Partnership
Nowadays, LLP or Limited Liability Partnership is normally chosen by several embryonic entrepreneurs, Financial Advisory Consultancies, Business Consultancies, Law Firms, Real Estate Agencies, Auditing Firms, Real Estate Agencies, and Small and Medium sized Businesses. Further, the main reason for obtaining Limited Liability Partnership Registration is that it protects the personal assets in the case of a dispute and provides various tax benefits as well.
Limited Liability Partnership
The term LLP or Limited Liability Partnership is defined under the provisions of the Limited Liability Partnership Act 2008. As per this act, any corporate body that is incorporated under this act will be termed as LLP.
Further, this business model is usually the blend of the benefits given to a private limited company and conventional partnership firm.
Moreover, in India, the concept of LLP was introduced in the year 2010. Also, all the rights and duties regarding the designated partners are administered by terms and conditions of the LLP Agreement.
Advantages of Limited Liability Partnership
The advantages of a Limited Liability Partnership are as follows:
Separate Legal Entity
An LLP has the feature of separate legal entity, i.e., the existence is distinct from its partners.
The term “limited liability” means that the liability of every partner is restricted to the extent of the capital contributed by him/ her.
Ease in Transfering Ownership
Unlike a Private Company, the partners of an LLP Firm can easily transfer their ownership to others.
As per Section 3 of the Limited LLP Act 2008, for the purpose of obtaining LLP registration, a firm is termed as a corporate body.
The term Perpetual Succession denotes that the entry and exit of members will not affect the continuance of an LLP Firm.
No Minimum Capital Requirement
There is no minimum capital requirement prescribed for the registration of an LLP Firm.
The term “LLP Agreement” denotes a printed stamp paper that is duly signed by all the partners. Further, this agreement acts as the basis for an LLP Firm and includes every aspect concerning LLP.
No Audit Requirement
There is no need to get the books of accounts audited in an LLP Firm, except in the situation as follows:
- When the annual turnover exceeds the threshold limit of Rs 40 lakhs; or
- If the capital contribution exceeds the limit of Rs 25 lakhs;
Simple Registration Process
Nowadays, the procedure for obtaining LLP Registration has been streamlined by the MCA by making it online completely.
Easy to Wind up
An LLP is not only easy to incorporate but easy wind up as well, unlike a private limited company.
Minimum Requirements For Limited Liability Partnership Registration
In India, the minimum requirements for Limited Liability Partnership Registration are as follows:
- A Minimum of 2 Designated Partners;
- At least 1 Designated Partner must be an Indian Citizen;
- Directors Identification Number (DIN);
- Digital Signature Certificate (DSC);
- Address Proof of the Registered Office;
Forms for LLP Registration
The forms required for obtaining LLP Registration are as follows:
It is required for the reservation of name;
It is required for incorporating LLP Firm;
A notice for the change of name;
It is the application form required for the conversion of a Partnership Firm into an LLP;
It is the application form required for the conversion of a Public Ltd Company into an LLP;
Documents Required for Limited Liability Partnership Registration
The documents required for the Limited Liability Partnership Registration are as follows:
- PAN Card, Aadhar Card, Driving License, Voter ID of the Partners;
- Address Proof of the Partners;
- Residence Proof of Partners;
- Latest Photograph;
- Passport (if in case any of the partner is a Foreign National or an NRI);
The documents required for Limited Liability Partnership are as follows:
- Address Proof of the Registered Office;
- Digital Signature Certificate;
- No-Objection Certificate from the Landlord whose premise has been used as the Registered Office;
- Utility Bill in the form of Water Tax Receipt, Electricity Bill (not older than two months);
Process for Obtaining LLP Registration
The steps involved in the Process for obtaining LLP Registration are as follows:
File Application for LLP Registration
In the first step, the proposed partners of an LLP Firm need to fill an online application for for registration.
Obtain DIN and DSC for LLP
Now, it is compulsory for all the partners to have DIN (Director Identification Number) and DSC (Digital Signature Certificate) for at least one proposed partner.
Apply for Name Approval
In this step, the partners need to apply for reserving a unique name for the firm with the MCA. Further, the name reserved remains valid for the period of 90 days starting from the date of reservation.
Also, partners can suggest a maximum of two names to the ROC by way of filling RUN.
Submission of Documents for LLP Registration
After the successful name approval, all the proposed designated partners need to submit the documents required for LLP Registration, such as Latest Photograph, Aadhar Card, PAN Card, Address Proof, etc.
Draft LLP Agreement
Now, the partners need to draft an LLP Agreement containing all the role, responsibilities, and duties of the designated partners concerned.
Further, it shall be significant to state that the partners need to file this LLP Agreement within 30 days in Form 3 either at the official MCA portal or to the respective ROC.
LLP Registration Certificate
Lastly, the partners need to apply for the Certificate of Registration (COR) of LLP, together with the Limited Liability Partnership Identification Number.
Post Incorporation Compliances
The Post-incorporation Compliances for an LLP Firm are as follows:
- Filing of an LLP Agreement;
- Apply for TAN (Tax Deduction Account Number);
- Apply for PAN (Permanent Account Number);
- Open a Bank Account;
Annual Compliances for LLP Firm
The Annual Compliances for an LLP Firm are as follows:
- Statement of Account and Solvency;
- Filing of LLP Annual Return;
- Filing of Income Tax Return;
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Frequently Asked Questions
Yes, the provisions of the GST Act is applicable to LLP Registration.
In India, there is no minimum capital requirement prescribed for incorporating an LLP.