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Limited Liability Partnership Registration

Overview

It is one of the most common forms of business in India, used by small businesses operating in the organized sectors. A LIMITED LIABILITY PARTNERSHIP REGISTRATION required at least two members in order to register, both the members can be a Designated Partners cum Shareholder of the company. A LIMITED LIABILITY PARTNERSHIP REGISTRATION can have up to 200 people as members as per the LLP Act, 2008. It Can Be Converted into Private Limited Company in future. The cost of LLP incorporation is lesser than a Private Limited Company incorporation and compliances are less stringent. Though as far as fund raising is concerned, Pvt Ltd Company has an edge over registered LLP. Though incorporated LLP (Limited Liability Partnership) Firm is better placed to raise fund than One Person Company. For LLP incorporation, we would be needing 2 DINs and 2 DSC. It also has huge Tax Advantages over Partnership or Proprietorship firms.

Firstly, you need to find unique name for the LLP. Proposed name should NOT be identical with another existing name. If Proposed name includes the name of a registered trade mark or a trade mark which is subject of an application for registration, then for approval of proposed name CONSENT of the owner or applicant for registration as the case may be, shall be required to be obtained and produced by the promoters.

Secondly, you need to comply with the MCA guidelines. You can do so by ensuring that the name has a unique component and a descriptive component.

Advantages of LLP

  • Separate legal entity : An LLP is a separate legal entity. This means that it has assets in its own name and can sue and be sued. Furthermore, one partner is not responsible or liable for another partner’s misconduct or negligence.
  • Perpetual Succession : An incorporated LLP has perpetual succession. Notwithstanding any changes in the partners of the LLP, the LLP will be a same entity with the same privileges, immunities, estates and possessions.
  • Raising Money : Financing a small business like sole proprietorship or partnership can be difficult at times. A LLP being a regulated entity like company can attract finance from PE Investors, financial institutions etc.
  • Compliances : As compared to a private company, the number of compliances are on lesser side in case of LLP.
  • Easy to Form : It is very easy to form LLP, as the process is very simple as compared to Companies and does not involve much formality.
  • Flexible agreement :The partners are free to draft the agreement as they please, with regard to their rights and duties.
  • Limited liability : The liability of the partners is limited to the extent of his/her contribution to the LLP. Unless fraud has been detected, the personal assets of the partner are protected from any liability of the LLP
  • No requirement of minimum contribution : As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital. Moreover, the contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefit to the LLP.

Disadvantages of LLP

  • Inability to Have Equity Investment : A LLP does not have the concept of equity or shareholding like a company. Hence, angel investors, HNIs, venture capital and private equity funds cannot invest in a LLP as shareholders. Thus, most LLPs would have to rely on funding from promoters and debt funding.
  • Higher Income Tax Rate : Income tax rate for a company with a turnover of up to Rs.250 crores is 25%. However, LLPs are taxed at a 30% rate irrespective of the turnover.
  • Higher Penalty for Non-Compliance : Even if a LLP does not have any activity, it is required to file income tax return and MCA annual return each year. In case a LLP fails to file Form 8 or Form 11 (LLP Annual Filing), a penalty of Rs.100 per day per form is applicable. There is no cap on the penalty and it could run into lakhs, if an LLP has not filed its annual return for a few years.
  • No requirement of minimum contribution : As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital. Moreover, the contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefit to the LLP.In case of a company, a penalty of up to Rs.4800 is applicable for not filing annual return for up to 270 days. However, the penalty for not filing annual return for company is set to be increased and matched with that of LLP.

Why Choose Limited Liability Partnership Registration

  • It is flexible and has limited liability.
  • Lesser compliance cost .
  • The possibility to grow big and expand

Required Documents

  • Copy of Rental Agreement (along with NOC from owner)/Sale Deed in case of own property.
  • Telephone or Mobile Bill/Electricity or Gas Bill Scanned copy of Notarized Rental Agreement in English
  • Affidavit from Partner
  • Copy of PAN card, Identity and Address Proof for DPIN for up to 2 directors

Process

Due to Digitalization of registration process, it’s become easy to register the Limited Liability Partnership

Obtaining DSC & DPIN

For obtaining DSC, self-attested copy of partner's pan card & his address proof is required.

Application for LLP Name

Firstly You need to find your name has not been taken

Secondly, you need to comply with the MCA guidelines. You can do so by ensuring that the name has a unique component and a descriptive component.

Company Incorporation Certificate

Once all the documents are approved by MCA , it will issue a incorpation certificate.

Apply for PAN & TAN & Bank Account

On the basis of incorporation certificate u can apply for the TAN , PAN & Bank.