What is a Limited Liability Partnership?
A Limited Liability Partnership (LLP) combines the benefits of a partnership with that of a limited liability company. In India, it took shape after January 2009 and was an instant success with startups and professional services. The idea behind LLP registration was to provide a form of business that is easy to maintain and benefit owners with limited liability.
Benefits of LLP Incorporation
Here are four major reasons why people tend to choose LLP registration as their business model:
Limited Liability
The members of an LLP registration are only liable for a small amount of debt incurred by the firm. In case of bankruptcy, the personal assets of the partners will not be taken into account. On the other hand, for proprietorships and partnerships, the personal assets of directors and partners will be seized if the business goes bankrupt.
Separate Legal Entity
An LLP is a separate legal entity from the partners in it. It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. The terms of dissolution have to be mutually agreed upon for the firm to dissolve.
Flexible Agreement
Transferring the ownership of an LLP is also simple. A person can easily be inducted as designated partner in LLP and the ownership is transferred to them.
Suitable For Small Business
LLPs having a capital amount less than ₹25 lakhs and turnover below ₹40 lakhs per year do not require any formal audits. This makes registering as an LLP beneficial for small businesses and startups.
LLP Registration Requirements and Eligibility Criteria
To be eligible for LLP company registration in india, one should meet the following criteria:
- At least two partners are required to form a Limited Liability Partnership in India (no upper limit)
- If a body corporate is a partner, a natural person must be nominated to represent it
- Each partner must have an agreed contribution towards the shared capital
- LLP should have an authorized capital of at least ₹1 lakh
- At least one designated partner should be an Indian resident.
Documents Required for LLP Registration
The documents required for LLP registration are as follows:
The partners have to provide the following documents:
- PAN card or passport (foreign nationals or NRIs)
- Aadhar card/ voter’s ID/ passport/ driving license
- Latest bank statement/ telephone bill/ mobile bill/ electricity bill/ gas bill
- Passport-size photograph
- Blank document with specimen signature.
Note: One partner must self-attest the first three documents. In the case of foreign nationals or NRIs, all the documents must be notarised (if currently in India or a non-commonwealth country) or apostilled (if from a commonwealth country).
For the registered office:
- Utility bills
- Notarized rental agreement in English
- No-objection certificate from the property owner
- Sale deed/property deed in English (in case of owned property).
How to Register an LLP in India?
You can register for LLP online through Fineopt. While we make LLP registration online a simple 3-step process for you, the actual registration process is elaborate and is explained below for your knowledge:
Step 1: Obtaining DSC And DIN
All the forms that need to be submitted online require the directors’ DSC. So, the first step in the process is to get DSCs and DINs for 2 partners. We collect the necessary information from you and file it on your behalf.
Step 2: Application For Name Approval
Simultaneously, we check if the name you want to register under is available and reserve it for your LLP. You can check for name availability in the MCA portal.
The approval of the name will be made by the registrar only if the central government does not deem it undesirable. The name should not have any resemblance to any of the existing partnership firms, LLPs, trademarks, or body corporates.
Step 3: LLP Agreement
The next step is to draft the LLP agreement and other documents for registration. An LLP agreement is crucial in a limited liability partnership as it determines the mutual rights and duties among the partners and between the LLP and the partners. Thus, our experts take utmost care in drafting this agreement.
The partners enter into the LLP agreement upon registering the LLP by filing Form 3 online on the MCA portal. This procedure has to be done within 30 days of the date of incorporation.
Step 4: LLP Incorporation Certificate
Our team will file the necessary forms and documents with the registrar. Once the registrar approves all the forms and documents, you get your LLP incorporation certificate and are almost set to run your business.
Step 5: Apply for Your PAN, TAN, & Bank Account
As soon as you get the incorporation certificate, we will apply for the PAN, TAN, and bank account for your LLP.
The following are included in our LLP Registration in India package:
- DSCs for 2 directors
- DINs for 2 directors
- Drafting of MoA & AoA
- Drafting partnership agreement
- Registration fees and stamp duty
- Company incorporation certificate
- PAN and TAN registration.
We also assist with the following for LLP registration in India:
- A first free consultation, followed by subsequent support to clear every concern you may face
- Complete support on opening a current bank account
- Comprehensive and on-time updates on ROC compliances
- Online accounting software valid for one year
- A master file that contains all the documentation needed to file the incorporation
- You will also get a zero-balance current account – powered by DBS Bank.
Time Taken for LLP Registration
The time taken to register a limited liability partnership in India depends on receiving the required paperwork and verifying that all applicable LLP Act provisions have been followed. The Registrar will register the LLP, at most 14 days after Form-2 is filed, and issue a certificate of incorporation in Form-16.
LLP Registration Fees
**Subject to change as per the state requirements, additional professional fees incurred.
Details of Fee
For registration of a Limited Liability Partnership, including conversion of a firm or a private company or an unlisted public company into a Limited Liability Partnership:
| Contribution Amount | Fee (in INR) |
|---|---|
| ₹ 1 to ₹ 1,00,000 | ₹ 500 |
| ₹ 1,00,001 to ₹ 5,00,000 | ₹ 2,000 |
| ₹ 5,00,001 to ₹ 10,00,000 | ₹ 4,000 |
| ₹ 10,00,001 and above | ₹ 5,000 |
The difference between the fees payable on the increased slab of contribution and the fees paid on the preceding slab of contribution shall be paid through Form 3.
For filing, registering, or recording any document, form, statement, notice, Statement of Accounts and Solvency, annual return, and an application along with the Statement for conversion of a firm or a private company or an unlisted public company into LLP by this Act or by these rules required or authorized to be filed, registered, or recorded:
| Contribution Amount | Fee (in INR) |
|---|---|
| ₹ 1 to ₹ 1,00,000 | ₹ 50 |
| ₹ 1,00,001 to ₹ 5,00,000 | ₹ 100 |
| ₹ 5,00,001 to ₹ 10,00,000 | ₹ 150 |
| ₹ 10,00,001 and above | ₹ 200 |
Fee for any application other than the application for conversion of a firm or a private company or an unlisted public company into an LLP shall be as under:
| Application Type | Fee (in INR) |
|---|---|
| An application for reservation of name u/s 16 | ₹ 200 |
| An application for direction to change the name u/s 18 | ₹ 10,000 |
| Application for reservation of name under Rule 18(3) | ₹ 10,000 |
| Application for renewal of name under Rule 18(3) | ₹ 5,000 |
| Application for obtaining DPIN under Rule 10(5) | ₹ 100 |
Fee for inspection of documents or for obtaining a certified copy thereof shall be as under:
| Inspection Type | Fee (in INR) |
|---|---|
| For inspection of documents of an LLP under section 36 | ₹ 50 |
| For Copy or extract of any document under section 36 to be certified by Registrar | ₹ 5/- per page or fractional part thereof |
Fee for filing any form or a Statement of Account and Solvency or a notice or a document by a foreign limited liability partnership:
| Filing Type | Fee (in INR) |
|---|---|
| For filing a document under Rule 34(1) | ₹ 5000 |
| Any other form or Statement of Account and Solvency or notice or document | ₹ 1000 |
Important Forms in LLP Registration
| Form name | Purpose of the form |
|---|---|
| FiLLiP | Form for incorporation of LLP |
| Form 1 | Form for reserving a name for the LLP |
| Form 2A | Details of designated partners and other partners of LLP |
| Form 3 | Information about LLP agreement |
| Form 8 | Statement of Account and Solvency |
| Form 11 | Annual Return of Limited Liability Partnership (LLP) |
| Form 17 | Application and statement for the conversion of a firm into LLP |
| Form 18 | Application and statement for conversion of a private company/unlisted public company into LLP |
| Form 24 | Application to the Registrar of Companies for striking off the name of LLP |
Features of Limited Liability Partnership
The key features of a Limited Liability Partnership (LLP) are:
Separate Legal Entity: LLP is a separate legal entity from its partners, which means it can own assets, borrow money, sue or be sued in its own name.
Limited Liability Protection: The liability of partners in an LLP is limited to the extent of their agreed contribution in the LLP. This means that the personal assets of the partners cannot be used to pay off the debts of the LLP.
Perpetual Succession: LLP has perpetual succession, which means that the LLP continues to exist even if the partners leave or change.
Flexible Management Structure: LLP can be managed either by the partners or by designated managers either by the partners or by designated managers. This allows for a flexible management structure.
Checklist for LLP Registration Online
Decide on the Partners: LLP requires a minimum of two designated partners who will be responsible for the legal compliance of the LLP.
Select a Suitable Name: Check for the availability of the desired name and ensure it complies with the LLP naming guidelines.
Obtain DSC: All designated partners must obtain a Digital Signature Certificate (DSC) for filing documents online
Obtain DIN: The designated partners must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA)
File LLP Agreement: Draft an LLP agreement, which includes details such as partners’ contribution, profit-sharing ratio, etc., and file it with the Registrar of Companies (ROC)
Obtain PAN and TAN: Apply for PAN and TAN for the LLP.
File Form for LLP Incorporation: File Form FiLLiP (Form for incorporation of LLP) with the Registrar of Companies (ROC), along with the required documents.
Register for GST: Register the LLP for GST if the turnover is above the threshold limit.
Register For Other Taxes: Register the LLP for other taxes such as Professional Tax, Import Export Code, etc., as per business requirements.
Obtain Necessary Licenses: Obtain necessary licenses such as FSSAI, Trademark registration, etc., as per business requirements.
Maintain Compliance: Comply with the ongoing statutory requirements such as filing of annual returns, audits, etc.
LLP Compliance
As required by the LLP Act of 2008, an LLP has a remarkably low number of compliances as compared to businesses. To foster transparency, good governance, and to safeguard the interests of all stakeholders, including ROC, Partners, Designated Partners, Investors, and Tax Departments, meeting these compliances is not only necessary but also mandated. These compliances can be broken down into four groups: one-time post-incorporation, yearly, event-based, and recurring compliances. Here, we’ll talk about the LLP’s yearly and one-time compliances; for more information about the other requirements, get in touch with one of our knowledgeable startup advisors.
One Time Compliance
In contrast to a corporation, a limited liability partnership only needs to comply with one requirement right away, which is the submission of the LLP Agreement to the ROC.
Filing of the LLP Agreement
The LLP Agreement, which contains all the terms and conditions that its partners have voluntarily agreed upon, is the LLP’s governing instrument. All of the LLP’s partners have signed the document, which is written on Stamp paper and then stamped and notarized by a public notary. The ROC is not needed to receive the Agreement at the time of incorporation. However, the LLP Agreement needs to be submitted to the ROC in e-Form 3 within 30 days of the date of incorporation.
Annual Compliance
An LLP must submit annual returns to the ROC, income tax returns to the IT Department, financial statements, and statements of solvency to the ROC as part of its annual compliance obligations every fiscal year.
| Compliance Requirement | Due Date |
|---|---|
| ROC Annual Returns (Form 11) | The Annual Returns of a particular year will be filed on or before 30 May of the next financial year. If the annual turnover of the LLP crosses ₹5 crores or the capital contribution crosses ₹50 lakhs in a financial year, the returns for that year must be certified by a practicing Company Secretary. |
| Financial Statements (Form 8) | The Financial Statements of a particular year will be filed on or before 30 October of the next financial year. The financial statements will have to be audited by a practicing Chartered Accountant only for financial years in which the annual turnover exceeds ₹40 lakhs or the capital contribution exceeds ₹25 lakhs. |
| Statement of Solvency (Form 8) | The Statement of Solvency of a particular year will be filed on or before 30 October of the next financial year |
| Income Tax Returns | The Income Tax Returns of a particular year will be filed on or before 31 July of the next financial year if a tax audit is not applicable. If a tax audit is applicable, then ITR would be filed on or before 30 September |
LLP Amendment 2022
The Corporate Affairs Ministry (MCA) updated the Limited Liability Partnership Rules in 2022. They had announced this on 11 February 2022. The new rules were set to start on 1 April 2022.
The updates included new rules about giving a new name to an LLP. There were also new rules about handling penalties and how to appeal against decisions. Two new forms, Form 16A and Form 33 CG, have been added. There were also new rules about fees for LLPs.
Synopsis of LLP (Amendment) Rules, 2022
The 2022 amendment to the Limited Liability Partnership Rules has updated Rule 5 (Fees), 18, and 19. It has also added some new rules:
1. Rule 19A – This rule is about giving a new name to an LLP under Section 17(3).
2. Rule 37A – This rule is about deciding penalties.
3. Rule 37B – This rule is about appealing against the decision of an officer.
4. Rule 37C – This rule is about registering an appeal.
5. Rule 37D – This rule is about the Regional Director handling an appeal.
The amendment also added some new forms:
1. Form 16A – This is for when a company changes its name because it didn’t follow the Regional Director’s order.
2. Form 33 – This is for making an appeal.