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.
Author
Santosh Patil
CEO & Founder @ Alliance Tax Experts
9769201316
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