07 Oct

What is a Limited Liability Partnership LLP

What is a Limited Liability Partnership (LLP)?

Limited Liability Partnership (LLP) is a type of business partnership of any kind, where all participating members have limited liability. This means that no partner is responsible for the loss, neglect and/or abuse of any other partners. Since not all partners have limited and full liability, this is known as a limited liability partnership. Like shareholders, partners also have the right to manage the business. Because of these features, it can be said that LLPs represent both corporation and partnership features.

The registration process as a new LLP

Registering for an LLP is a relatively simple process that can be summarized in simple steps as mentioned below:

Step 1: Obtain Digital Signature Certificate (DSC)

The first step towards registering an LLP is to get the digital signatures of all the designated partners of the LLP. A digital signature is required to fill out LLP documents online. These documents have digital signatures that further help in obtaining certificates.

Required digital signatures can be obtained from certified government agencies, such as National Informatics Center, IDRBT Certifying Authority, e-Mudhra, CDAC and NSDL. The cost of taking DSC will be as per the certified agency applied by the applicant.

Step 2: Book the name

To register a proposed LLP, the applicant must obtain a Limited Liability Partnership-Reserved Separate Name (LLP-RUN) to process at the Central Registration Center. However, before quoting or quoting a name, it is always better to check for a free name from the portal of the Ministry of Corporate Affairs (MCA). This will provide the proposed LLP with a list of companies with similar or similar names. Once the name is selected, the Deputy Registrar will approve the name which does not match any existing LLP. The LLP-RUN must be submitted with a fee which will be forwarded to the Registrar for approval.

Step 3: Incorporation of LLP

For the establishment of an LLP, it is necessary to fill and submit to the Registrar for registration of Limited Liability Partnership (FLLP). Fees have to be paid as per Appendix ‘A’. Only 2 persons will be allowed to apply for an allotment.

Step 4: File limited liability partnership agreement

This agreement governs the mutual rights and duties between the partners. The agreement can be submitted online in Form 3 on the MCA portal. Forms for LLP Agreement must be filled out within 30 days from the date of incorporation. The stamp of the LLP agreement has to be printed on paper, with each state having a different stamp.

Documents required for LLP registration

The documents required to register your LLP are the same as those required for most business setups. However, there are two sets of documents that will have to be submitted for LLP registration i.e. documents required for the partner and LLP documents.

Partner documents

All partners in the LLP are required to submit the following:

·        Identity cards and PAN cards of all partners.

·        Evidence of a partner including voter ID, passport or driving license.

·        Passport size photo on white background.

·        Passports of NRIs and foreign nationals wishing to become partners in LLP

Documents of LLP

Documents related to the LLP component that is required to be submitted compulsorily are:

·        Proof of registered office address must be submitted at the time of registration or within 30 days of the establishment of the LLP. If the registered office is a rented facility, NOC from the landlord is required. In addition, at least one proof of residence must be submitted, such as utility bills older than 2 months.

·        Digital Signature Certificate (DSC)

How much does LLP registration cost?

Find below the prices involved in the registration process:

·        DSC - About Rs. 1500-2000 for 2 partners

·        Name Reservation - Rs. 200

·        Incorporation - depends on the contribution of capital Contribution up to Rs.1 lakh - Rs. 500 and Rs. Contribution between 1 and 5 lakhs - Rs. 2000

·        LLP Agreement - Depending on the capital contribution & Professionals involvement

·        Contribution up to Rs. 1 lacs - Rs. 50 for filling up Form 3 and State-based stamp duty with LLP

Benefits of getting LLP registration

·        Limited Liability: The liability of the partners is limited and it is limited to their contribution only

·        LLP can be easily transferred from one person to another.

·        No audit is required for turnover less than Rs. 40 lakhs and Rs. 25 lakhs for capital contribution

·        LLPs have the right to seize and transfer property and this can be done in their own name

·        The existence of an LLP is considered even after the death of any partner

·        An LLP is a separate legal entity and is not affiliated with a partnership, or both a partner and a legal person can sue or sue each other.

·        No dividend tax in case of LLP

Eligibility Criteria for LLP Registration

·        The minimum age required to start an LLP is 18 years, but a person under 18 can also become a member

·        At least two people are required to start an LLP

·        There is no ceiling for partners

·        No less capital is required to start an LLP except stamp duty

·        A person should be an Indian resident

·        The specificity of the name for the LLP should be there

·        The name should not be like an existing company

Why do business owners prefer LLPs over partnership registration?

·        While an LLP is a separate legal entity, the liability of the partnership firm partners is not limited to the extent of their contributions. The liability of the partnership is not limited to the partnership

·        Two designated partners are required to create an LLP. In partnerships, the maximum capping is up to 50 partners

·        LLP registration is mandatory and is done with the Ministry of Corporate Affairs, while partnership organizations are registered under the Registrar of Firms.

·        The LLP name should be unique and duplicate any existing name but there is no obligation to use this name in the partnership.

·        The credibility of an LLP is higher than that of a partnership firm

Frequently Asked Questions on LLP Registration

Q. How long does it take to register as an LLP?

A. The total time for North LLP registration is approximately 15 days.

Q. How much does it cost to register as an LLP?

A. for LLP, Rs. 12,500.00 - Rs.15,000.00 Depending on the number of partners and the contribution of capital & professionals involvements

Q. What are the restrictions regarding the minimum and the maximum number of partners in an LLP?

Answer: - The minimum number of partners required to start an LLP is two and there is no limit to the maximum number. In the case of a partnership, the minimum number of partners remains two, while the maximum can reach up to 50.

Q. Can Corporate Body be a partner of LLP?

A. The answer is yes, an individual or body can be a partner of a corporate LLP.

Q. What is the eligibility to be a partner?

Answer: - Anyone who is literate and eligible for the contract can become a partner. No major qualification required.

Q. What about “Designated Partners”?

Answer: - At least 2 Designated Partners/members should be appointed to prepare the LLP. Designated partners are primarily responsible for regulatory and legal obedience as well as for their responsibilities as "partners, per-se".

Q. Who could be the “Designated Partner”?

Answer: - Any 2 persons who are residents of India, are partners of LLP or are nominated by Corporate will be considered as designated partners.



Santosh Patil

CEO & Founder @ Alliance Tax Experts





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