Earlier, since January 2018; it was not possible to incorporate a Limited Liability Partnership (LLP) for persons not having DIN but the Ministry of Corporate Affairs has come up with the most awaited notification on 18th September, 2018 w.r.t. LLP incorporation in the same line as a Company vide Limited Liability Partnership (Second Amendment) Rules, 2018 that came into force w.e.f. 2nd October, 2018.. So, in this article, we will discuss upon the benefits, documents/information required, steps and costing to incorporate a LLP.
1. BENEFITS OF LLP
- Limited liability unlike partnership where partners are personally liable as well.
- Flexible to manage as LLP Act, 2008 gives at most freedom to manage affairs as per the agreement executed between partners.
- Taxation: LLPs are tax friendly as well like dividend distribution tax (DDT) is not levied on LLP and the partners can distribute the profits among themselves only.
- Audit: Under LLP Act, 2008; statutory audit by a chartered accountant is mandatory only where annual turnover/ contribution exceeds Rs 40 lacs/Rs 25 lacs.
- It is easier for a LLP to raise money than a sole proprietorship or partnership as it’s a regulated entity like a Company.
- As compared to a private company, the number of compliances is on lesser side in case of LLP.
2. DOCUMENTS/INFORMATION REQUIRED FOR FORMATION OF LLP
- Proposed name(s) along with significance
- Object of the proposed LLP
- Contact No. and Email ID of the LLP
- Proposed contribution and its share
- Address of registered office along with NOC and proof (for eg.: utility bill)
- Following information of proposed designated partners and partners:
- Copy of self attested PAN and residence of proposed designated partners and partners.
- Photograph
- E-mail ID and Contact No.
- DPIN/DIN
- Consent to act as designated partner as per the format provided in Rule 7 and Rule 10(8) in LLP Rules, 2009.
3. STEPS TO INCORPORATE LLP
- Reserve the name using RUN-LLP as available mca.gov.in (not mandatory)
- File form for incorporation of Limited Liability Partnership (FiLLiP)
- After approval of FiLLip, execute LLP agreement and file the same in Form-3.
4. COSTING FOR LLP INCORPORATION
The costing for incorporation of LLP shall be as following:
| S. No. | Particulars | Amount (In Rs.) |
| 1. | Reservation of name (not mandatory) | 200 |
| 2. | Filing of form FiLLiP | |
| • Up to 1,00,000 | 500 | |
| • More than 1,00,000 up to 5,00,000 | 2,000 | |
| • More than 5,00,000 up to 10,00,000 | 4,000 | |
| • More than 10,00,000 | 5,000 | |
| 3. | Execution of LLP agreement | 1% of contribution |
| 4. | Filing of Form 3 | Depends upon contribution |
For instance, if we want to incorporate a LLP with Rs. 1,00,000/- contribution, the total costing shall be Rs. (200+500+1000+50) i.e. Rs. 1750/-.
IMPORTANT POINTS:
1. The name, if approved, shall be reserved for a period of three months.
2. An application for reservation of name can be either filed separately through RUN-LLP with statutory fees of Rs. 200/- or as a part of FiLLiP only without any separate fees for name reservation.
3. The persons not having DIN can also apply for incorporation a LLP subject to a maximum limit of two individuals.
4. Two chances for re-submission shall be there for FiLLiP
5. Incorporation of LLP shall be vested with Central Registration Center i.e. CRC now.
{The author is a Company Secretary in Practice and can be reached at (M) 9999952595 and (E) cskajalgoyal@gmail.com
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