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Summary: A Limited Liability Partnership (LLP) is an increasingly popular business structure for startups in India, offering flexibility, limited liability, and lower compliance requirements compared to a traditional company. An LLP combines partnership and corporate benefits, allowing partners to avoid personal liability for the firm’s debts, making it a secure choice for new ventures. Established by at least two partners, LLPs have a distinct legal identity and perpetual succession. Registering an LLP involves specific steps: obtaining Digital Signature Certificates (DSCs) for designated partners, applying for a Designated Partner Identification Number (DPIN), reserving a unique name, filing the incorporation form, and establishing a formal LLP agreement. Partners need to submit identity, address, and office documents, and secure a Certificate of Incorporation before starting operations. Key advantages include reduced regulatory compliance, exemption from audit for businesses with low turnover, perpetual existence, and straightforward ownership transfer. LLPs are also tax-efficient, making them a favorable structure for Indian entrepreneurs looking to launch sustainable businesses in an evolving economic landscape. By understanding the LLP registration requirements and benefits, entrepreneurs can make an informed choice for establishing a compliant and resilient business framework in India.

Introduction

The post explains the Future of Limited Liability Partnership (LLP) in India’ covering What is an LLP, Minimum Requirements to Form an LLP, Documents Required for LLP Registration, Process of LLP Registration and Benefits of LLP Registration in India. Read thoroughly to have a detailed understanding of the Future of LLP in India’s ever-changing business landscape.

Your Guide to LLPs Building a Secure Future for Indian Startups

LLP Registration: Future in India 

With a rapidly increasing startup ecosystem in India, a Limited Liability Partnership (LLP) has become one of the preferred choices of startups due to its flexibility and liability protection. Due to this, it has gained tremendous popularity among entrepreneurs in India within quite a short period. It comprises features of a company such as distinct business identity and perpetual existence, but as compared to a company, the compliance requirements are significantly lower in an LLP. Based on these factors, choosing LLP for your startup is a Win-Win situation and thus can turn out to be a game changer for you. Let’s delve deeper into LLP to gain its comprehensive knowledge!

What is a Limited Liability Partnership (LLP)?

Limited Liability Partnerships (LLPs) have emerged as one of the top choices of entrepreneurs in India. The main reason behind its increasing popularity is that it combines the benefits of a partnership firm and a company. The best part about preferring this business structure is that it offers greater flexibility and autonomy, along with protecting personal liability on the part of the partners or shareholders of the LLP.

This business concept was introduced in India in 2008 and is governed by the Limited Liability Partnership Act 2008. Simply put, an LLP is a type of partnership firm that can be established by at least two partners who enter into an LLP agreement. The partners of the LLP have limited liability; thus, their personal assets are protected from the partners’ liability toward the LLP. The LLP also has the perpetual succession feature, ensuring that it will last regardless of the changes in partners’ lifespan.

Minimum Requirements to Form an LLP 

Similar to other business formations, Limited Liability Formation (LLP) in India also has some specific minimum requirements that must be fulfilled to incorporate it smoothly. The minimum requirements to register an LLP in India includes;

1. Minimum 2 Partners

At least two partners must be present to register an LLP. At least one partner must be a resident of India who has been staying in India for at least 182 days in a financial year.

2. Designated Partners

At least two partners of an LLP must be designated partners responsible for compliance and legal matters. Designated partners must have a valid DIN (Director Identification Number).

3. Name of the LLP

The chosen name of the LLP must comply with naming guidelines prescribed by the Ministry of Corporate Affairs (MCA) and should not resemble any existing entity name or trademark.

4. Digital Signature Certificate (DSC)

A Digital Signature Certificate (DSC) is one of the key requisites for forming an LLP, especially for filing an online application for formation. DSC ensures that the provided documents and application forms are legally signed to validate the application form.

Documents Required for LLP Registration

 1. Documents for Partners

  •  PAN Card

PAN Card is a mandatory identification document that all partners who are Indian Residents must provide.

  • Passport

If any of the partners of an LLP are non-residents, they must provide a notarized copy of their passport.

  • Address Proof

For proof of address, a bank statement, utility bills (Electricity or telephone bill), or an Aadhar card containing the current address should be presented.

  • Digital Signature Certificate (DSC)

DSC of at least one designated partner is required as it is used to digitally sign the LLP Registration documents and online application form for LLP incorporation.

Documents for Registered Office Address Proof

 1. If the Office is Rented/Leased:

  • Rent Agreement / Lease Deed: Usually, an agreement is signed between the landlord and the LLP.
  • No Objection Certificate (NOC) from the Property Owner: A written consent from the owner allowing the use of his premises as the registered office.
  • Utility Bill in the Owner’s Name: Utility Bills (Electricity bill, water bill, telephone bill, or gas bill) not older than two months to validate the address.

 2. If the Office is Owned by any Partner:

  •  Property Title Deed / Sale Deed: It is required to confirm the ownership of the premises.
  • NOC from the Partner-Owner: Even if a partner owns the property, a No Objection Certificate is required to use it as the LLP’s registered office.

3. If the Office is in a Co-Working Space:

  •  Agreement with the Co-working Space Provider: It states that the LLP has the right to use the space.
  • NOC from Co-working Provider: The NOC document authorizes the LLP to register the space as its office.

4. General Requirements for Almost All Cases: 

  • A recent Utility Bill (Electricity, Water, or Gas) or Property Tax Receipt is mandatory, regardless of ownership; which should not be older than 2 months.
  • The registered office can be a Commercial or Residential property, according to the MCA norms.

Process of LLP Registration 

Step 1: Obtain Digital Signature Certificate

The designated partners of the proposed LLP must apply for digital signature certificates. As they are responsible for regulating management and taking key decisions in LLP so their digital signatures are required to digitally sign the attached documents and application form to validate and complete it. DSC is the key requisite therefore it should be obtained before initiating the LLP Registration process.

Step 2: Apply for DPIN

The next step is to apply for the DPIN of all the proposed designated partners in the LLP. Form DIR-3 is used to apply for allotment of DPIN. The applicant needs to attach the copy of required documents with the form. The form should also be signed by a Company Secretary (CS), Chartered Accountant (CA) or Cost Accountant who is in practice currently.

Step 3: Search & Reserve Name

The proposed name of the LLP must adhere to the naming guidelines prescribed by the MCA. RUN-LLP (Reserve Unique Name- Limited Liability Partnership) is filed to reserve the name, which undergoes processing for final approval by the Central Registration Centre. Before reserving an LLP Name, it’s advisable to check whether the name is already used or not through the Free Name Search facility by the MCA Portal.

Step 4: File LLP Incorporation Form

Now, go for filing the LLP Incorporation Form, which is FiLLiP (Form for incorporation of Limited Liability Partnership). This form is filed with the Registrar who has jurisdiction over the state where the registered office of the LLP is located.

Step 5: File LLP Agreement

LLP agreement contains the relationship, rights and obligations of partners. This agreement must be filed within 30 days of receiving the Certificate of Incorporation.

Step 6: Obtain Certificate of Incorporation (COI)

Upon approval of the FiLLip form, the MCA issues the Certificate of Incorporation (COI) with an LLP Identification Number (LLPIN).

Step 7: Apply for PAN and TAN

It’s necessary to apply for PAN and TAN if you have not obtained these documents earlier. The partners must apply separately to the Income Tax Department to obtain these crucial documents for LLP.

Step 8: Open a Bank Account

The proposed LLP has a bank account on its name. Use the Certificate of Incorporation, PAN and LLP Agreement to open a current account on the Name of the LLP.

Benefits of LLP Registration 

1. Distinct Identity: LLP Registration gives your partnership business a separate legal entity. It is deemed as a juristic person distinct from their partner’s identity and thus can sue or be sued. It’s one of the top LLP Registration benefits.

2. Limited Liability: The liability of the partners is limited. It is limited to the extent of their contribution to the LLP.

3. Perpetual Existence: LLP exists perpetually even after change in lifespan of its partners such as in case of death or permanent disability.

4. Minimum Regulatory Compliance: Though the LLPs enjoy the benefits of both a partnership firm and a company, it is obliged to adhere to very little regulatory compliance as compared to them.

5. No Requirement of Audit: In LLPs, no audits are required up to a turnover of less than 40 lakhs and capital contribution of less than 25 lakh. It is one of the attractive llp registration benefits.

6. Ownership Transferability: LLPs allow easy transferability of ownership from one partner to another person.

7. Taxation: LLPs and partners; both can grant loans to each other. However, there is no provision of dividend in this business framework.

CONCLUSION

In recent years, India’s startup landscape has met a skyrocketed rise. Due to this, the need for the most suitable, flexible, and easy-to-stay-compliant business framework has also increased. Among several business structures in India, a Limited Liability Partnership (LLP) has become the top startup choice. The post helps you better understand the Future of LLPs in an ever-changing, vast, and diverse business landscape like India, covering almost all crucial factors pertaining to the LLP Registration Process in India. 

If you’re looking for a top-notch LLP Registration Service in India, consider contacting Setindiabiz, a pan-India online expert service provider of LLP registration. They’re quick, efficient, and affordable, with experts available for free guidance and query resolutions whenever required. Moreover, they offer end-to-end LLP Registration service including meeting out the checklist, filing applications, and preparing or drafting documents. Their team will help save your time and effort, making the whole process smooth, hassle-free, and flawless for you.

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Hi! I'm Deepika Shukla, and I specialize in crafting engaging content. Currently, I'm part of the talented team at SETINDIABIZ, where we offer dependable legal solutions, tailored to empower startup businesses. https://www.setindiabiz.com/company-registration View Full Profile

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