An LLP or limited liability partnership is a hybrid business structure that has the benefits of companies as well as of partnership firms. Like partnership firms, LLPs are very easy to register. At the same time like companies, LLPs can carry on even when its owners change or die. An LLP is a unique business structure that is only available in India. If you are thinking of starting a new business, starting it as an LLP is a great choice. This is because you can easily do register an llp. It is not very expensive to form an LLP, and it has very few compliance requirements after incorporation.
Understanding an limited liability partnership
As mentioned before, LLPs have many benefits. Many people confuse limited liability partnership with partnership forms. In reality, an unlimited liability partnership can be considered an improved version or an updated version of a partnership firm. Many people used to go for partnership firms because they were very easy to incorporate, but the main drawback of a partnership firm was always that if any of the partners left the firm or died, the partnership firm would instantly cease to exist.
This flaw does not exist in LLPs. LLPs, like companies, enjoy perpetual succession. Additionally, LLPs also have limited liability. The main issues people face while going for company registration are that it’s time-consuming, it’s expensive, and companies have a lot of compliance requirements. LLPs do not have to deal with any of that. LLPs also come under the purview of the Ministry of Corporate Affairs (MCA) but the Act governing them is the LLP act of 2008, which has very few compliance requirements.
Here are some more advantages of an LLP
- LLPs enjoy separate legal identities like companies.
- LLP partners are not personally liable for the LLP’s actions.
- LLPs do not have too many compliance requirements.
- LLPs overall are very cost-effective.
- LLPs do not require any minimum capital contribution from its members/partners.
- LLPs can be sold to new owners, something Partnership firms lack.
All the documents needed to incorporate a new LLP
if you want to incorporate an LLP, you must provide the following documents:
- You will have to provide Copies of all the to-be partners’ PAN Cards
- You will also be required to provide the copies of identity proofs of all the to-be partners. This includes copies of Aadhaar card, passport, or driving licence etc.
- All to-be partners also need to provide copies of their Address Proof. They can provide a copy of their electricity bill, water bill or any other utility bill.
- As for the LLP office, you need to provide a proof of address for the Registered Office. You can provide Utility Bills for this.
- If the LLPs registered office has been taken on rent, then an NOC (No Object Certificate) from the owner of the property, and a copy of the rental agreement will be needed.
- Finally, all partners of the LLP need to have a DSC.
LLP Registration Process
- Firstly, all the partners need to apply for a DIN or DPIN. you need a minimum of 2 partners to incorporate an LLP, hence a minimum of two DINs or DPINs are needed.
- Next, the to-be partners need to have a DSC or digital signature certificate. This is important as these DSCs have to be affixed at the bottom of the LLP registration form.
- Once you’ve acquired the DIN/DPINs and DSCs, you now need to apply for name reservation for your LLP. You can do this by using the “RUN” service available on the MCA website.
- Finally, you can now apply for LLP incorporation. The LLP registration form is a web form known as FiLLiP. This form is available on the MCA website.
- Last, but certainly not the least, you need to draft and submit your LLP agreement within 30 days of incorporation. This is a very important step and cannot be missed.
The entire registration process typically takes 20 days.
All the important forms for new limited liability partnership Registration
- Eform FiLLiP for new LLP registration
- Form 5 for a name change (if required)
- Form 17 for conversion of an existing partnership firm into an LLP
- Form 18 for conversion of a private limited company into an LLP
LLP Registration Costs
- DSC applications for two: INR 1500-2000
- The DIN applications for two: INR 1000 for two partners
- Name Reservation: INR 200
- The incorporation cost of the LLP depends on capital contribution:
- INR 500 for up to 1 lakh capital contribution
- INR 2000 for Limited Liability Partnerships with a capital contribution of 1-5 lakhs
- INR 4000 for Limited Liability Partnerships with a capital contribution of 5-10 lakhs
- INR 5000 for Limited Liability Partnerships with a capital contribution of more than 10 lakhs
- Charges for drafting and filing of LLP: Based on the professional services used.
- Stamp Duty on the LLP incorporation form depending on capital contribution:
- INR 1000 for up to 1 lakh capital contribution
- INR 2000-5000 for Limited Liability Partnership with a capital contribution of 1-5 lakhs
- INR 6000-10000 for Limited Liability Partnerships with a capital contribution of 5-10 lakhs
- INR 10000 for Limited Liability Partnerships with a capital contribution of more than 10 lakhs
Other Important points for LLP Registration
- There is no maximum number of partners for an LLP
- One of the LLP partners needs to be Indian and residing in India.
- At least one of the Partners needs to be Indian and residing in India.
- Every partner of an LLP contributes something to the LLP, be it monetary or not; what they will contribute is specified beforehand in the LLP agreement.
Main Cities for limited liability partnership Registration
LLP registration is popularly done in major metropolitan cities. This is because the process for LLP registration in Mumbai or Bangalore gets completed really quickly. Moreover, incorporating a business is generally prioritised in the bigger city due to higher level of awareness amongst the people as well as high level of competition in this city.