Limited Liability Partnership

In the Indian business landscape, Limited Liability Partnerships (LLPs) are becoming the go-to structure for many enterprises. Merging the benefits of corporations and traditional partnerships, an LLP is formed when two or more individuals enter into an LLP agreement. This structure offers the continuity of a corporation and the limited liability of its members.

The concept of the LLP was introduced to India in 2008. The LLP agreement outlines the duties and privileges of the partners, who are responsible for adhering to the provisions of both the agreement and the Limited Liability Partnership Act, 2008.

What exactly is an LLP?

Established in India in 2008, an LLP is a prevalent form of business organization. It’s a versatile legal entity that allows its members to manage the business while also providing them with protection from personal liability. An LLP shares characteristics with both a partnership and a corporation. It can be operated with the flexibility of a partnership while enjoying the benefits of a corporate structure.

Partners in an LLP collaborate under the terms of an LLP agreement. An LLP has fewer regulatory obligations than a corporation but maintains a separate legal identity from its partners, limiting their liability. Consequently, forming an LLP involves less paperwork than incorporating a company in India.

LLPs have become a favoured choice for entrepreneurs in various industries due to the protection of personal assets and simpler legal requirements compared to traditional corporations.

What are the Characteristics of an LLP?

Characteristics of an LLP include:

Corporate Body

An LLP is a legal entity established and registered under the Limited Liability Partnership Act 2008, as per Section 3. It operates independently from its partners and is recognized as a separate legal entity.

Continuous Existence

Unlike a standard partnership, an LLP enjoys the advantage of ongoing existence. This means it can continue operations throughout India even if partners retire, the LLP faces insolvency, or if a partner is incapacitated or deceased. An LLP can also own property and enter into contracts in its own name.

Independent Legal Entity

An LLP is an independent legal entity, similar to corporations. It is solely accountable for its liabilities and assets. Moreover, the liability of each partner is limited to their investment in the LLP. Thus, an LLP can enter into contracts and is considered a separate legal entity.

Limited Liability

Under Section 26 of the Act, each partner acts as an agent for the LLP in business dealings. However, no partner is an agent for another partner. Partners’ liability is confined to their agreed contribution in the LLP, safeguarding them from personal liability as dictated by the LLP agreement.

Partner Requirements

To form an LLP, a minimum of two partners is necessary, with at least two designated partners. At least one designated partner must be resident in India. There is no cap on the maximum number of partners in an LLP.

Types of LLP Forms in India

There are various forms required for different purposes under the LLP framework in India:

1. FiLLiP Form
   • Used for incorporating an LLP.
   • Includes information on the first LLP agreement, partners, and their contributions.
   • Also updates any existing LLP agreement.
2. Run LLP
   • Allows partners to reserve a name for their LLP before incorporation.
   • Submitted to secure the desired LLP name.
3. Form 3
   • Contains details of the LLP Agreement.
   • Includes proposed name, registered office address, and partner information (names, addresses, contributions).
   • Filed with the Registrar of Companies (RoC) during LLP incorporation.
4. Form 8
   • Statement of Account & Solvency.
   • Filed annually to disclose LLP’s financial position, solvency status, and compliance.
   • Submitted to the RoC as part of LLP’s annual return.
5. Form 11
   • Mandatory under the LLP Act, 2008.
   • Provides critical information about LLP partners, registration number, and registered office address.
   • Details partners’ names, addresses, contribution amounts, designated partners, and changes during the financial year.
6. Form 24
   • Used to apply to the RoC regarding insolvency and financial distress matters.
   • Submitted for specific issues related to the LLP’s financial challenges.

These forms play crucial roles in various stages of an LLP’s lifecycle, from incorporation to annual compliance and addressing financial matters. Each serves specific purposes under the regulatory framework governing LLP operations in India.

What are the Advantages of Limited Liability Partnership in India?

When considering the formation of an LLP in India, it’s important to recognize its benefits:

Limited Partner Liability

The liability of LLP partners is capped at their investment amount. This means they are not personally liable for the firm’s debts, only for their own contributions.

Cost-Effectiveness

Setting up an LLP is more economical than establishing a public or private limited company. Additionally, LLPs have fewer regulatory compliances to follow.

No Minimum Capital

There’s no requirement for a minimum capital investment to start an LLP. Partners can contribute any amount they choose to initiate it.

Pass-Through Taxation

LLPs benefit from pass-through taxation, meaning the partners are taxed directly on the LLP’s income, avoiding the double taxation that corporations face when distributing profits to shareholders.

Flexibility 

LLPs offer considerable flexibility in ownership and management. Ownership shares can be transferred without restrictions, and partners have the freedom to establish any management structure they prefer.

Naming an LLP 

Choose a distinctive name for your LLP that doesn’t mimic any existing company names. The name should end with ‘LLP’ or ‘Limited Liability Partnership’ to indicate its structure.

Documents Required:

• PAN Card of all partners
• ID proof of all partners
• Address proof of all partners
• Address proof of the registered office
• NOC from the owner of the registered office
• Proof of ownership or lease agreement of the registered office

Eligibility Criteria for LLP

1. Partners must be at least 18 years old.
2. A minimum of two individuals is required.
3. There’s no cap on the maximum number of partners.
4. No minimum capital is necessary, except for stamp duty.
5. At least one partner must be an Indian resident.
6. The LLP’s name must be unique.

LLP Documentation

For LLP registration, these documents are required:

• Proof of registered office address, provided during registration or within 30 days of incorporation.
• If the office is rented, a No Objection Certificate (NOC) from the landlord is needed.
• At least one recent utility bill as proof of address.
• A Digital Signature Certificate (DSC) is also necessary.

LLP Compliance

LLPs registered in India have to follow various compliances as directed by the Ministry of Corporate Affairs (MCA). These include filing statutory returns such as annual returns, financial statements, and tax returns with the MCA. Additionally, LLPs with sales turnover exceeding INR 40 lakhs or capital exceeding INR 25 lakhs must comply with statutory audit requirements.

Compliance Details

Launch Your LLP in India Smoothly with Corporate Raasta Consulting

Ensure Your Business Name is Unique

Corporate Raasta Consulting simplifies the process of checking the availability of your desired business name for your LLP in India. Our specialists are here to assist you in confirming that your chosen name is ready for registration.

Trademark Search Online

Our team aids in the online search for trademarks to safeguard your LLP’s brand identity. We inform you if the name you’ve chosen is free for registration, ensuring your intellectual property rights are protected with ease and precision.

Choosing the Right Business Structure 

Corporate Raasta Consulting offers expert comparisons between companies, LLPs, and sole proprietorships, helping you make a well-informed decision for the prosperity of your business. Choose the best-suited business structure with our guidance.

Essential Documents for LLP Registration 

Corporate Raasta Consulting provides a detailed list of essential documents, streamlining the LLP registration process. Trust us for a straightforward and hassle-free registration experience.

Additional Business Registrations 

In addition to LLP registration, Corporate Raasta Consulting assists with other vital business registrations. We ensure your business meets all necessary requirements, including PAN, TAN, GST, and more.

MCA Compliance Made Simple 

Stay compliant effortlessly! Corporate Raasta Consulting offers comprehensive services to ensure your LLP adheres to all Ministry of Corporate Affairs (MCA) regulations without any complications.

Procedure for Registering an LLP in India

The procedure for registering an LLP in India, though it shares characteristics with a company, is distinct. Here’s a breakdown of the registration steps:

Step 1: Acquire Digital Signature Certificate (DSC)

The initial step is to secure the digital signatures of the designated partners. These signatures are essential for all documents and applications related to the LLP. Certified government bodies provide these digital signatures.

Step 2: Obtain Designated Partner Identification Number (DPIN)

Designated partners or prospective ones must apply for a DPIN using Form DIR-3, which requires scanned copies of identification documents like Aadhaar and PAN, and must be endorsed by a company secretary, chartered accountant, or cost accountant.

Step 3: Secure Name Approval

Applicants need to reserve a unique name for the LLP through the LLP-RUN process at the Central Registration Center. It’s advisable to check the MCA website for name availability to avoid similarities with existing entities. The name should not closely resemble any existing LLP.

Step 4: Register the LLP 

Filing the FiLLiP form with the registrar is necessary for incorporation, adhering to the fee structure in Annexure ‘A’. At least two partners must apply.

Step 5: Submit LLP Agreement 

This agreement outlines the partners’ rights and responsibilities. Form 3 must be filed electronically via the MCA Portal within 30 days of formation, printed on state-specific stamp paper.

Step 6: Receive Certificate of Incorporation

The ROC issues this certificate upon verification of all submitted documents and applications, officially recognizing the LLP.

Step 7: Apply for PAN and TAN

Following incorporation, the LLP must apply for a PAN and TAN.

Why CRC?

CRC is a customer-centric organisation with a team of professional experts with vast experience in LLP Registration. We offer end-to-end customer support, guidance and doubt clarity for our clients in helping them realise their dreams of entrepreneurship through LLP Registration.