Limited Liability Partnership (LLP)

LIMITED LIABILITY PARTNERSHIP (LLP)

Overview and Incorporation

Limited Liability Partnership is form of business having status of both partnership and Corporate. It is registered under LLP Act, 2008 and rules made there under.

Pros of LLP:

·         LLP can be formed by any amount of capital. There is no need for minimum capital for LLP.

·         It requires a minimum of 2 partners and there is no limit on the maximum number of partners of the LLP.

·         The cost of registering LLP is low as compared to a company.

·         All limited companies have to get their accounts audited but in case of LLP, there is no such requirement. Although it is required to audit when the contributions of LLP exceeds Rs.25 lakh or Annual turnover exceeds Rs.40 lakh.

·         No need to maintain registers.

·         There is no requirements of holding Board and General Meetings.

·         The LLP has to file only two forms every year i.e. Annual return and Statement of accounts and solvency.

·         LLP is treated in par with the partnership firm. The provision of Dividend Distribution Tax (DDT) is not payable on LLP. Also under Section 40(b) deductions are allowed on the interest given to partners, any payment of salary, bonus, commission or remuneration.

·         Compliance level is so low.

Cons of LLP:

·         LLP can be bind by the act of one partner without the other partner i.e. one partner can make all other liable or bind them.

·         They cannot raise money from public.

PROCESS OF REGISTRATION OF LLP

Step 1: Obtain DSC

Step 2: Apply for DIN

Step 3: Name Approval

Step 4: Incorporation of LLP

Step 5: File LLP Agreement

Step 1: Digital Signature Certificate (DSC)

Before initiating the process of registration, the designated partners of the proposed LLP have to apply for DSC. This is because all the documents for LLP are filed online and are required to be digitally signed.

Step 2: Director Identification Number (DIN)

The Designated Partners have to apply for the DIN.

The application for allotment of DIN has to be made in Form DIR- 3. You have to attach the scanned copy of documents (usually Aadhaar and PAN) to the form.

At least one designated partner must be Indian resident.

Step 3: Reservation of Name

Form 1 is filed for the reservation of name of proposed LLP. But before quoting the name in the form, it is recommended that you use the free name search facility on MCA portal. The system will provide the list of closely resembling names of existing LLPs based on the search criteria filled up. This will help you in choosing names not similar to already existing names. You need to provide six names in the order of preference in Form 1 with the significance of the proposed name.

The registrar will approve the name only if the name is not undesirable in the opinion of the Central Government and does not resemble any existing partnership firm or an LLP or a body corporate or a trademark.

Step 4: Incorporation of LLP

Form 2 is the application form for the incorporation of the LLP. You must keep in mind following points while filing Form 2.

• All the details in the form 2 must be filed with the relevant attachment and filled correctly like – total number of partners and designated partners, amount of partner’s contribution, etc.
• You have to pay the prescribed registration fee based on the contribution of partners in the proposed LLP.
• The form must be digitally signed by a person named in the incorporation document as a designated partner having DIN and professional involved in incorporation of LLP.
• On the submission of the form, if the registrar is satisfied, they will register the proposed LLP.
• It takes 10-20 days for the registration of LLP subject to government processing time and submission of necessary documents.

Step 5: File Limited Liability Partnership Agreement 

LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners.

LLP agreement must be filed in form 3 online on MCA Portal.

Form 3 for LLP agreement has to be filed within 30 days of the date of incorporation.

The LLP Agreement has to be printed on Stamp Paper. The value of Stamp Paper is different for every state.

DOCUMENTS REQUIRED TO REGISTER LLP

Here is a list of documents required for registration:

• PAN Card of the Partners. It is mandatory.
• ID Proof of the partners i.e. Voter ID/Passport/Licence/Aadhar, etc.
• Residence Proof of Partners i.e. Bank Statement/Mobile Bill/Electricity Bill/Gas Bill not older than 2 months, etc.
• Photograph
• Passport (in case of Foreign Nationals/ NRIs)
• Proof of Registered Office Address i.e. Mobile Bill/Electricity Bill/Gas Bill not older than 2 months, etc.
• Digital Signature Certificate (DSC) of Designated Partners
• Email id, Mobile Number and Place of Birth of Partners.
• Capital Contribution, Profit sharing ratio, Object of the LLP etc.

TIME INVOLVED IN THE REGISTRATION PROCESS

LLP formation starting from obtaining DSC to Filing Form 3 takes approximately 10-20 days subject to availability of all the documents and government processing time.

Contact Details:

VISHAL SHARMA

Company Secretary

Mob: 9716763754

Email: csvishalpbs@gmail.com

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Disclaimer: The Content is prepared on the basis of our general understanding and on the basis of relevant provision of Companies Act, 2013 read with rules made there under. The whole content is only for the knowledge sharing purpose, we do not take any responsibility for the correctness of the same.