LLP is abbreviated of Limited Liability Partnership and is an organization that grants you the benefits of limited liability. The liability of a partner in an LLP is only responsible for their capital invested and no such personal liability. An LLP firm must adhere to the regulations and rules imposed by the government for it to continue to operate. It is possible to find the regulations you have to adhere to in order to establish yourself as an LLP within India.
Limited liability of LLP partners
LLP is a legal entity that provides limited liability protection for its members. The liability of the members is limited to the amount they contribute to the business. That’s why the members are not responsible for the debts of one another or other misconduct. But, the partners are accountable for their own debts. The LLP is also able of suing legal notifications under the name of its members.
In order to establish and register an LLP it is necessary to apply for Director Identification Number (DIN). It is a unique number given through the Ministry of Corporate Affairs. It is also necessary to get a Digital Signature Certificate (DSC).
LLPs have various legal capacities and are able to enter into contracts. They also have the ability to purchase properties under themselves. However, FDI is not allowed in real estate businesses and agricultural/plantation activities.
The steps to start registering the LLP
LLP is a type of business structure that combines the advantages of a partnership firm with the advantages of the limitations company. This LLP is governed by the Limited Liability Partnership Act, 2008. In the LLP partnership, partners’ liability are limited by the amount made to the company. The LLP provides a variety of benefits, including the reduction of compliance costs and capital requirements that are less as well as the flexibility for a partnership company as well as a host of other benefits.
In order to establish as an LLP the minimum requirement is two partners must be present. Each partner must present an PAN card. Additionally, a electronic signature (DSC) is mandatory for all designated partners. Digital signature certificates are issued by government-approved certification agency. The price for an electronic signature certificate is different between certifying agencies and certifying agency.
Selecting a catchy name for your LLP
The choice of a name that is descriptive that describes Your LLP firm is a vital step. With this in mind, The Registrar of Companies Central (ROC) has established guidelines on how to name your LLP.
The ROC has set the bar very high, and entrepreneurs who want to succeed must complete their homework prior to hitting the new name.. There are many traps to stay clear of.
For instance, The ROC (now the central ROC) is not going to approve the name if it is too similar to an existing business or existing Trade Marks. The reason for this is that the registrar will consider the ways in which the name being proposed is linked to the operations and activities of the business.
Another reason to select the right title for the LLP firm is to ensure that you draw customers to your company. The LLP name should convey the essence of your business and help you be more connected to your sector.
Incorporating your LLP to another person who joined them as a Partner
LLP is an entity that combines those advantages that come with a partnership as well as the advantages of a corporation. The LLP is considered to be a hybrid entity that provides liability protection for its members. They are often used by professional companies.
LLPs are an excellent choice for small-sized businesses since they provide a lower level of liability for the owners. The members in an LLP are not responsible for the negligence and debts of their members. Most of the time, LLPs are managed by an organization of business professionals.
Limited Liability Partnerships (LLP) can be registered in just a few steps. The first step is to draft a partnership contract. The agreement should define the obligations of the LLP as well as the partners. The LLP can submit the agreement to the state, or you can use on-line legal assistance.
Yearly file LLP Form 8 and 11
All LLPs are required to file annual forms regularly to avoid heavy fines. Failure to submit annual forms is considered to be a serious crime that could lead to being struck off from the LLP. The government maintains documents about LLPs along with their activity. Inability to file annual forms is deemed to be fraud.
If an LLP is not engaged in commercial activities, it must to declare on Formula 8 as well as Form 11 if it is operational or not. If it’s not operational then the LLP remains non-operational for a minimum of one year.
For LLPs with an annual turnover that exceeds 40 lakhs, it’s required to file an audited financial report. The audited financial statement has to get the certification of an auditor. The company is also required to pay the prescribed Roc filing fees. In the event that it does not submit the required fees and is found to be in breach, it will be subject to a fine of 10 rupees per day. The penalty is increased with time.
For more information on LLP registration in Bangalore or LLP filings, please contact Prakasha & Co Bangalore.
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