LLP Registration

COMPLETE PROCESS OF REGISTRATION OF LIMITED LIABILITY PARTNERSHIP
| DOCUMENTS | PROCESS | REQUIREMENTS

Before knowing the complete process of registration of limited liability partnership. Let’s us first discuss about its background.

During the early 20th century, lawmakers all throughout the world were of the view that limitless accountability and responsibility in the overall general partnership had come in the way of business development. Also, such professionals without access to a lot of capital were incapacitated globally. Accordingly, a unique vehicle that combined the highlights of both corporate substances and organizations was required for associations among experts who are already regulated. This corporate vehicle was known as the Limited Liability Partnership, which was different from the conventional partnership. In fact, LLP was enacted in the UK in the year 2000 to encourage growth in the services sector.

Limited Liability Partnership Act, 2008 (“LLP Act, 2008”) is a noteworthy special corporate business vehicle, as it provides both the benefits of a private company and flexibility of a partnership firm based on limited liability and allows its members the flexibility to organize their internal structure as a partnership based on a mutually arrived agreement. LLP is a body corporate that means once it is incorporated, it becomes legal entities separate from its partners, which is not the same as in the General Partnership because the general partnership is a body corporate only for the purpose of Companies Act, 2013 but except that, it cannot hold the character of a Body Corporate. The LLPs are more formal than partnership firms as it requires a written partnership agreement and customarily comes with annual reporting requirements depending on their legal jurisdiction.

Following are the Salient Features of Limited Liability Partnership Act, 2008:-

1. BODY CORPORATE- The LLP is going to be a body corporate, and a lawful substance breaks from its accomplices, i.e., partners.

2. Mutual rights and duties of partners- The common rights and obligations of the partners of the LLP Inter-se and individuals of the LLP and its accomplices are going to be administered by an arrangement between the partners Inter-se or between the LLP and therefore the partner subject to the provisions of the act. The Act provides flexibility to device the agreement as per their requirement and choices.

3. Minimum Partners- Each LLP shall have a minimum of 2 Designated Partners, of whom at least one shall be resident in India.

4. Accounts- The LLP is going to be under an obligation to keep up yearly records reflecting valid, true, and reasonable. An assertion of the records and solvency will be documented by each LLP in accordance with the act by the Registrar each year.

5. Limited Liability- The liability of a partner of LLP is limited up to his agreed contribution to the LLP.

6. Conversion- A firm, private company, or an unlisted public company would be allowed to be converted into LLP in accordance with the provisions of the Act.

The LLP Act was amended in 2018 to ease out the LLP business activities just because of what specific provisions were changed, e.g. (A) form 1 has been replaced by RUN-LLP form, and form 2 has been replaced by FiLLiP form. (B) conversion of private unlisted company into LLP (Form18).

In general terms, LLP is a kind of partnership where partners have Limited Liabilities, unlike the General Partnership. Limited liability partnership has its own merits and demerits when compared to conventional or general partnership.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

MERITS OF LIMITED LIABILITY PARTNERSHIP:-

  • Limited Liability- It is the most significant benefit of doing business as an LLP firm as each partner’s liability is limited to the extent of his contribution as opposed to the sole proprietorship over the traditional partnership firm where the personal assets of the proprietor or partners could be at risk in the event of a failure of the business.
  • No minimum capital contribution required- LLP could be framed with no base capital commitment rather than the private limited company necessity of rupees 1,00,000/-. Indeed, even the commitments could be made in portions which make the little business people profit from these advantages.
  • Lower Registration Cost- LLP registration cost is low when compared to any other company (public, private).
  • No compulsory Audit- LLPs are required to audit only when;
    (a) when LLP contributions exceeds INR 25 Lakhs.
    (b) when LLP annual turnover exceeds INR 40 Lakhs.
  • Taxation Aspect- LLP is not liable to pay Text on income and Share of its partners. Thus, no dividend distribution tax is payable under section 40(b).
  • Dividend Distribution Tax (DDT) not applicable- If the partners of LLP withdraw profit from the company, the owners need not to pay and additional tax liability in the form of DDT.
  • Lower Compliance burden resulting in savings-  Approximately at least 8 to 10 compliances per year are required to be done by a private limited company, whereas in case of a limited liability partnership is required to file only the Annual Return and a statement of Account and Solvency.
  • Easy winding up- Partnership can be easily created and dissolved as compared to private limited company wherein it takes around 2 to 3 months to get dissolve.  

DEMERITS OF LIMITED LIABILITY PARTNERSHIP:-

  • Inclusion of an Indian citizen as LLP partner- A NRI/Foreign individual who needs to consolidate an LLP in India will have at any rate one accomplice who is an Indian resident. Two unfamiliar accomplices can’t frame an LLP without having one occupant Indian accomplice alongside them.
  • Transfer of ownership- Consent of all partners has to be obtained if a partner wants to transfer his ownership rights.
  • Filing of various returns- Public disclosure is the main disadvantage of an LLP. An LLP needs to submit an Annual Return and Annual Statement of Accounts & Solvency with the Registrar of Companies every year. Income Tax Return (IT return) must also be filed to the Income-tax department for the LLP.
  • Number of Partners- There must be a minimum number of 2 partners in order to start a Limited Liability Partnership.
  • Huge Penalties- The expense of non-compliance of procedural matters, for example, late recording of e-structures, is high, which would prompt a tremendous amount of punishments inferable from INR 100 for consistently till the time the offense of late documenting proceeds.
  • Profit Retention- Profit cannot be held similarly as an organization limited by shares. This implies all procured benefit is viably disseminated with no adaptability to hold over benefit to a future duty year.
  • Inability to raise venture capital funding– Financial speculator, would be reluctant to put resources into an LLP structure. This is on the grounds that all ‘investors’ in an LLP should be accomplices, which have certain obligations toward the element. No VC needs any of these obligations and would, subsequently, just put resources into a private restricted organization.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

PROCESS OF REGISTRATION OF AN LLP

For enlisting an Indian LLP, you need to at first apply for a Designated Partner Identification Number (DPIN), which ought to be conceivable by recording eForm for getting the DIN or DPIN. You would then need to get your Digital Signature Certificate and register something practically the same on the entryway. Starting there, you need to get the LLP name asserted by the Ministry. At the point when the LLP name is attested, you can enlist the LLP by reporting the joining structure.

Steps included in the registration of LLPs-

Step 1: Application for DPIN- All assigned accomplices of the proposed LLP will get “Designated Identification Number (DPIN)”. You need to record eForm DIR-3 to get DPIN. On the off chance that you as of now have a DIN (Director Identification Number), the equivalent can be utilized as a DPIN.

Step 2: Acquire/Register DSCThe Information Technology Act, 2000 accommodates the utilization of Digital Signatures on the archives submitted in electronic structure to guarantee the security and credibility of the reports documented electronically. This is the lone secure and bona fide way that a record can be submitted electronically. Thus, everything filings done by the LLP(s) are needed to be recorded with the utilization of Digital Signatures by the individual approved to sign the reports. Gain DSC – An authorized Certifying Authority (CA) gives the advanced mark. Affirming Authority (CA) implies an individual who has been allowed a permit to give an advanced mark testament under Section 24 of the Indian IT-Act 2000. Register DSC – Role check can be performed solely after the signatories have enlisted their Digital mark endorsements (DSC) with LLP application.

Read more about DSC: https://www.trijuris.com/digital-signature-certificate/

Step 3: Enrolment- To record an eForm or to profit any paid help on the LLP entryway, you are first needed to enroll yourself as a client in the important client class, for example, enlisted and business client.

Step 4: Incorporate LLP- Apply for the name of the LLP to be enrolled in RUN – LLP (Reserve Unique Name-Limited Liability Partnership (Application for reservation or change of name) for the equivalent. After that, relying on the proposed LLP, the applicant needs to prepare and file Form FiLLiP ( Incorporation documents and Subscriber’s statement) Once the structure has been affirmed by the concerned authority of the Ministry, you will get an email in regards to something similar, and the situation with the structure will get changed to Approved.

Step 5: File LLP agreement- After incorporation of LLP, a basic LLP is to be reported within 30 days of joining of LLP. The customer needs to record the information in “Structure 3” (Information regarding Limited Liability Partnership Agreement and changes, expecting to be any, made in that).

Here are the documents which are necessary to create a limited liability partnership firm:-

  1. Documents of Partners –
  2. Pan card/ ID proof of partners.
  3. Address proof of partners
  4. Residence proof of partners (latest mobile, electricity bills& bank statement must be submitted as residence proof).
  5. Photograph of partners.
  6. Passport (only for foreign nationals & NRIs).
  • Documents of LLP —

•           Proof of registered office address.

•           Digital signature certificate.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

CONCLUSION

Limited Liability Partnership has acted as a boon to the business partners, who earlier had unlimited personal liability for their business acts. This unlimited liability has hampered the growth of the conventional partnership firms, which has been resolved at first by the Limited Liability Act, 2008 & later by the Limited Liability Act (Amendment), 2019.

Although, LLP has some limitations and disadvantages but as a whole, it has provided an opportunity to the entrepreneurs to limit their liability and to grow their business.

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