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Formation of Limited Liability Partnership
Limited Liability Partnership (LLP) is a hybrid between a company and a partnership. It is an alternative corporate business form which offers the benefits of a limited liability to the partners at low compliance costs. It also allows the partners to organize their internal structure like a traditional partnership.
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Advantages of LLP Incorporation
Limited Liability
In an LLP, partners enjoy limited liability, meaning they're only liable up to their capital contributions. Their personal assets aren't used to cover debts and losses beyond their liabilities.
Separate Legal Entity
An LLP is liable for its assets, and partners' liability is limited to their capital contributions. Creditors of the LLP aren't creditors of individual partners.
Perpetual Succession
An LLP can continue to exist even if partners retire, become incapacitated, or pass away. It can enter contracts and hold property in its own name.
Flexible Role for Partners
LLP partners have flexible management roles defined in the LLP agreement. Each partner can choose their level of involvement, whether active or silent.
No Compulsory Audit
LLPs aren't required to audit their accounts unless contributions exceed INR 25 lakhs or annual turnover exceeds INR 40 lakhs.
No DDT
LLP partners aren't subject to Dividend Distribution Tax when withdrawing profits, making profit withdrawal simpler.
Fewer Compliance Requirements
Running an LLP is easier and cheaper than a private limited company due to fewer compliance requirements.
Easy to Wind Up
Closing an LLP takes less time than winding up a private limited company.
Lower Registration Costs
The registration cost of an LLP is lower compared to other business forms.
Who and Why should you get LLP registered?
Any person who would like to avail the advantages of limited liability, fewer compliances, ease of operations, lower costs, no DDT may opt for this form of structure.
Process of LLP Incorporation
- Since the documents of LLP are filed online and are required to be digitally signed, the proposed designated partners need to obtain their digital signature certificates from certifying agencies.
- They usually have a validity of one or two years and can be used at that time for filing of Income Tax documents or Ministry of Corporate Affairs (MCA) documents online.
- Application for reservation of name is required to be made to the MCA. Form LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is required to be filed for reserving the name of proposed LLP which shall be processed by MCA.
- Two proposed names of the LLP can be provided in one application. Availability of a particular name can also be checked over MCA as name resembling the name of some previous organization is not approved.
- DPIN and DSC are not required for Name Reservation through RUN-LLP.
- The name is valid for a period of 3 months.
After the LLP Name Approval Letter is issued to the proposed Partners signifying approval of name by the LLP, partners have 3 Months to file the incorporation documents and register the LLP.
Application for online registration of LLP is required to be made online using FiLLiP (Form for incorporation of Limited Liability Partnership).
LLP Agreement shows the mutual rights and duties among the partners and between LLP and its partners.
It has to be filed in Form 3 online within 30 days of incorporation. LLP Agreement has to be printed on Stamp Paper, value of which is separate for every state.
The last step is to apply for the PAN & TAN of LLP after which the bank account can be opened for LLP.
Documents required for LLP Incorporation
ID Card : ID Card (PAN Card) of the Partners
Address Proof : Address Proof of the Partners
Photograph : Photograph of Partners
Utility Bill : Utility Bill of the proposed Registered Office of the LLP
No-Objection Certificate : No-Objection Certificate from the Landlord
Copy of Rent Agreement : Copy of Rent Agreement between the LLP and Landlord
Passport: Passport (in case of foreign nationals)
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We will deliver you following:
- Name Approval Letter.
- Incorporation Certificate.
- LLP Agreement.
- DIN Approval Letter and Digital Signature Token
- PAN Card of the LLP and Company Stamp
- TAN/TDS Letter of the LLP.
- Incorporation kit.