If you are looking to start a business in India, one of the most efficient and popular business structures is an LLP. LLP full form is Limited Liability Partnership. An LLP combines the benefits of both a partnership firm and a company, providing limited liability to its partners. This guide will break down all the process of Limited Liability Partnership registration in India.
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What is Limited Liability Partnership Registration in India?
A Limited Liability Partnership (LLP) is a hybrid business structure that offers the flexibility of a partnership and the advantages of limited liability. Unlike a traditional partnership, where partners are personally liable for the business’s debts, an LLP protects partners’ personal assets from the business’s liabilities.
What are the benefits of an LLP?
Registering an LLP offers various benefits. They include;
- Limited Liability:
- Partners are only liable for the amount they invest in the business.
- Separate Legal Entity:
- An LLP is a separate legal entity from its partners, meaning it can own assets, incur debts, and enter contracts in its own name.
- Flexible Management Structure:
- Unlike a private limited company, an LLP does not have strict management requirements.
- Tax Benefits:
- LLPs enjoy several tax advantages, including no Dividend Distribution Tax (DDT).
What are the requirements for LLP Registration in India?
To register an LLP in India, certain LLP Registration requirements should be met. Those requirements include;
- Partners:
- At least two partners are required, with no maximum limit.
- Designated Partners:
- At least two designated partners, one of whom must be a resident of India.
- Digital Signature Certificate (DSC):
- All designated partners need a Digital Signature Certificate to sign documents electronically.
- Director Identification Number (DIN):
- All designated partners must obtain a Director Identification Number.
- Name Approval:
- Choose a unique name for your LLP that complies with the naming guidelines provided by the Ministry of Corporate Affairs (MCA).
What is the process for Limited Liability Partnership Registration in India?
To complete an LLP Registration online, you should follow the following steps.
- Obtain Digital Signature Certificate:
- Apply for a DSC for all designated partners from certifying authorities.
- Certifying Authorities like eMudhra, Sify, and NSDL provide DSCs.
- Apply for Director Identification Number:
- Obtain a DIN for all designated partners by applying through the MCA portal.
- You can apply for the DIN through Form DIR-3 on the MCA website.
- Name Reservation:
- Visit the MCA website and file the RUN-LLP (Reserve Unique Name-Limited Liability Partnership) form.
- Provide up to two proposed names in order of preference.
- Ensure the chosen name is unique and not like any existing company or LLP.
- MCA will process the name approval request and approve it if it meets the guidelines.
- Incorporation of LLP:
- Once the name is approved, file Form FiLLiP (Form for Incorporation of Limited Liability Partnership) on the MCA portal.
- Attach the following documents:
- Address proof of the registered office
- Identity and address proof of all partners
- Subscriber’s sheet signed by all partners
- Pay the prescribed LLP registration fee.
- The Registrar will review the form and documents and approve the incorporation.
- File LLP Agreement:
- Draft an LLP agreement outlining the rights and duties of partners.
- The agreement should include details about the profit-sharing ratio, partners’ roles, and other management protocols.
- File the LLP agreement in Form 3 on the MCA portal within 30 days of incorporation.
What are the documents required for LLP Registration in India?
Apart from the requirements mentioned above, there are certain LLP Registration documents both for partners and for the office.
- For Partners:
- Permanant Account Number (PAN) card
- Address proof like Aadhar card, voter ID, passport, driving license etc.
- Passport-size photograph
- For Registered Office:
- Proof of address (rent agreement, utility bill, or property deed)
- No-objection certificate (NOC) from the property owner
What are the advantages and disadvantages of LLP?
Before registering for LLP, you should be aware about the advantages and disadvantages of LLP Registration in India. Click here to know more on the advantages and disadvantages of LLP.
Advantages | Disadvantages |
---|---|
Limited Liability | Compliance Requirements |
Separate Legal Entity | Higher Penalties |
Flexible Management Structure | Limited Capital Raising |
Tax Benefits | Conversion Challenges |
Perpetual Succession | Limited Recognition |
Ease of Incorporation | Fewer Compliance Requirements than Companies |
No Audit Requirement | Profit Distribution |
Compliance and Annual Filings after registering LLP
After registering your LLP, ensure you comply with the following annual requirements:
- Annual Return (Form 11):
- File within 60 days from the end of the financial year. It includes details about the number of partners and any changes in the LLP.
- Statement of Accounts and Solvency (Form 8):
- File within 30 days from the end of six months of the financial year.
- It includes the financial details of the LLP and a declaration of solvency.
- Income Tax Return (ITR):
- File by July 31st of the assessment year. If your LLP’s turnover exceeds INR 40 lakhs or the contribution exceeds INR 25 lakhs, you must also get your accounts audited.
Post-Registration Compliance
- Books of Accounts:
- Maintain proper books of accounts either on a cash basis or accrual basis.
- Audit Requirements:
- If the annual turnover exceeds INR 40 lakhs or the contribution exceeds INR 25 lakhs, the LLP must appoint a chartered accountant to audit its accounts.
- Registrar of Companies (ROC) Filings:
- File necessary returns and forms with the Registrar of Companies as required.
Conclusion
In conclusion, registering an LLP in India offers various benefits including limited liability, separate legal entity status, and tax advantages make LLPs an attractive option for many entrepreneurs. Those who met the requirements can ensure a successful Limited Liability Partnership registration in India.
If you need assistance, consider consulting 24efiing to guide you through the process. Start your business journey today with an LLP and enjoy the benefits of this business structure!
FAQs
1. What is a Limited Liability Partnership?
A Limited Liability Partnership is a business structure that combines the benefits of both a partnership and a company.
2. How does LLP differ from a traditional partnership?
Unlike a traditional partnership, where partners have unlimited liability, an LLP provides limited liability protection to its partners, meaning their assets are not at risk in case of business debts or legal issues. Also, an LLP enjoys perpetual succession, meaning it continues to exist irrespective of changes in partnership.
3. What are the benefits of registering as an LLP in India?
The benefits of an LLP include:
– Limited liability protection for partners
– Easier transfer of ownership
– Lesser compliance requirements compared to a private company
– No minimum capital requirement
– Tax advantages, such as no dividend distribution tax.
4. What documents do I need to register an LLP in India?
The documents required for LLP registration are:
– PAN card and Aadhaar card of partners
– Address proof
– Residential proof
– Proof of registered office address
– Digital Signature Certificate of designated partners
– LLP Agreement
5. What are the steps to register an LLP in India?
For registering an LLP in India, the following steps need to follow:
– Get Digital Signature Certificates for partners.
– Apply for Director Identification Numbers for partners.
– Reserve a unique name for the LLP.
– File the incorporation form with the necessary documents.
– Draft and file the LLP Agreement.
– Certificate of Incorporation from Registrar of Companies.