If you are planning to setup a Limited Liability partnership or LLP in India, you will find all the relevant requirements laid down by Registrar of companies (RoC). Also find the step by step process for registration of Limited Liability Partnership (LLP) in India along with other necessary information like fees, documents required, capital requirements, requirement of minimum number of partners, process for registration of name, etc.
The Limited Liability Partnership or more popularly known as LLP is a boon for micro or small businesses where one partner doesn’t wish to be liable for another’s mistakes and misconducts. The LLP also makes sure the partners get ‘limited liability protection’ to the owners from debts of the partnership. It is a great business structure for a group of new business professionals or a business owned by a joint family and is getting popular by the day.
Advantages of formation of Limited Liability Partnership (LLP) in India
With company structure like Private limited company and public limited company or partnership form, why should you go with a Limited Liability Partnership (LLP) registration in India is easier to setup with lesser compliance and simple day to day operations. Among the various advantages of incorporation of Limited Liability Partnership (LLP) in India, few of them are :
Lesser cost of incorporation
In comparison to incorporation of Private limited company, Limited Liability Partnership (LLP) in India is not only easier to setup, but also cost effective. Not only the cost of incorporation is lesser but also the cost of compliance is also significantly low.
No minimum Capital requirements
In a LLP, there is absolutely no requirement for minimum capital (unlike in private limited company where it is 1 lakh). However, the contribution of any partner towards the capital of the LLP may also include and tangible or intangible, movable or immovable property.
No limit on Number of Partners
While minimum 2 partners are required to form a Limited Liability Partnership (LLP) in India, there is absolutely no limit on the maximum number of partners.
Tax Audit Requirements
Unlike Companies, be it private limited or public limited, where the audit is mandatory irrespective of capital requirements, in Limited Liability Partnership (LLP), such requirement is not starts only with capital contributions exceeding Rs.25 lakhs or annual turnover exceeding Rs.40 lakhs.
LLP, for the purpose of taxation, is just like a partnership firm. It is required to pay Income tax at the rate of 30% instead of corporate tax rate of 25%. However the share of profits given to partners is not a dividend, so the question of Dividend distribution tax doesn’t even arise. Moreover, interest paid to partner (not more than 12%), salary or bonus or commission for the actual work done by working partner is allowed for deduction from the profits.
Similar to other company legal structures, LLP also need to complete annual compliance that includes Income tax returns and Financial statements and Annual Returns filings with MCA at the end of each year.
No Equity shareholding
Any Limited liability partnership or LLP is not constituted through equity so selling of its equity or shareholding to any other person or company in not possible. Thus funding avenues like venture capital or private equity capital may not be used in this case. However LLP may always raise capital from existing or new partners or through loans from banks.
Limited Liability Partnership or LLP is superior to any partnership in terms of limiting the liabilities of the partners. It frees the partners of the fear of being responsible for someone else’s misconduct.
Documents required for registration of Limited Liability Partnership in India
Here’s a list of documents required for LLP registration:
- PAN Card copies of all the partners
- Passport sized photographs of all the partners.
- Water/ electricity/ telephone bill or the latest bank statement to serve as a proof of registered office space.
Copy of the sale deed/ property deed, in case of an owned property.
- NOC from the property owner.
- Copy of the Rent Agreement.
- NOC from the landlord, the format for which will be provided by us.
- Copy of Passport, if the partners are NRIs/Foreign citizens, duly certified.
- Digital Signature Certificates.
Step by Step Procedure for Registration of Limited Liability partnership (LLP) in India
To register as an LLP, a few eligibility criteria have to be met. These are as follows:
- Must have at least two partners who’re both eighteen years or above old.
- A minimum of at least one partner should be an Indian Resident.
- DIN/DPIN for all the designated partners.
There is no minimum capital corpus requirement for LLP (unlike Private Limited Company)
Step by Step Procedure for Registration of Limited Liability Partnership (LLP) in India
There are a bunch of steps that are to be followed in order to register your company as a Limited Liability Partnership. These steps include:
STEP 1 : Obtain the DSC & DIN/DPIN
The initiating step for all the partners or would be Designated Partners of a Limited Liability Partnership is to apply for the Digital Signature Certificate and DIN/DPIN. The digital signature is an online signature used for the purpose of filing while the DIN/DPIN refers to Directors Identification number or Designated Partner Identification number issued solely by the Ministry of Corporate Affairs.
- DIN/DPIN for 2 Designated Partners
DIN/DPIN or Designated Partner Identification Number is a registration of Designated Partners with Registrar of Companies. Similar to PAN or Aadhaar, it is the mandatory registration required for becoming Designated Partner in any Limited Liability Partnership in India.
- DSC for 2 Designated Partners (Digital Signatures)
DSC or Digital Signature Certificates are the signatures of designated partner that enables to sign any document in the digital form. All documents that are now filed with RoC or MCA are filed online. To file any such documents on behalf of any limited Liability Partnership (LLP) in India, one need to sign digitally, using this DSC.
If the designated partners have already obtained both the DSC and DIN/DPIN, then they can easily skip to the next step.
STEP 2 : Filing the Name for the Limited Liability Partnership in India
Once the DSC and DIN/DPIN is in place, its the time to get the name approved for our Limited Liability Partnership in India. To apply for LLP name, the online web-based eform-Reserve Unique name-‘RUN’ has to be filled and submitted.
Here’s what you should factor in while selecting a name for your LLP:
List of naming guidelines have been issued by the Registrar of Companies specifically for LLPs. These rules are meant to be followed accordingly and if they’re not, there is a good chance that the names will not be approved.
● Select a meaningful name – You should select a name that reflects what your brand is all about. People should have get an idea of the business from the meaning attached to the name itself.
- The name should be simple and short – You should go for a name of your LLP to the point, easy to pronounce and easy to remember. A complicated name will always be another complicated word that won’t be imprinted in the minds of people at once.
- Select a unique name – Your company’s name should not
- Blacklist Abstracts – The generic or random words are rejected on the spot. The words “bank, exchange and stock exchange” are also rejected in no time, and should be avoided.
- Make sure you have different Trademarks – You have to run checks and ensure that there aren’t any certified trademarks by the same identical name on the website of ‘IP India’. In case the name you have chosen is already a registered under a trademark, you can still get it approved only if you manage to obtain a NOC from it’s owner.
- A fixed Suffix – It is mandatory that the name of your should end with ‘LLP’, which indicates that your company is an Limited Liability Partnership.
- Choose a Descriptive Name – You have to select a name that is descriptive of what the LLP is all about.
- Should not be an illegal or offensive name – The name of your choosing for your LLP shouldn’t comprise any illegal word. It should not be abusive or offensive to the beliefs of any particular religion or community.
STEP 3 : Incorporation of the LLP
The next step is the Incorporation of the LLP or Limited Liability Partnership in India is to submit another form FiLLiP. FiLLiP or Form for incorporation of Limited Liability Partnership is used for incorporation of LLP in India. Along with this form, fees for incorporation of LLP or Limited Liability Partnership in India is to be paid. The name that was approved as per step 3 need to be filled as the proposed name of the Limited Liability Partnership in India or LLP
STEP 4: Filing of the LLP Agreement or Deep
The final steps include the submission of two forms that include the filing of the LLP agreement and documenting the partner’s details. This LLP agreement or LLP deed defines the rights of partners and norms according to which the partnership will perform. This agreement is to be filed as per form 3 on the MCA portal i.e www.mca.gov.in within 30 days of LLP incorporation. The agreement is only valid if it is duly stamped as per state laws or jurisdiction.
You may find the above steps to be quite tricky and can take quite some time to complete. Which is why we at seedup.in are at your service to make sure you have a perfect business strategy that suits your trade and company dynamics and have all the processing of Limited Liability Partnership smoothened up for you.
All you need to do is register at seedup.in for a Limited Liability Partnership and enjoy a low maintenance partnership from then onwards.
Steps included in the process of LLP Registration with us:
- Fill the Form – Fill our LLP Registration Form and submit the required documents.
- DSC and DIN/DPIN- Once your documents are submitted, you will receive your DSC and DIN/DPIN.
- Verification and Application of name approval – Company related details will be verified by us after which we apply for the LLP name approval.
- Submission of LLP registration documents – All the documents will be arranged and organised by us, like the MOA and AOA and filed with the ROC.
- Receive LLP Certificate and DSC – All you have to do is receive the LLP Certificate and DSCs we provide you.
Forms required for registration of LLP or Limited Liability Partnership in India
RUN-LLP (Reserve Unique Name – Limited Liability Partnership) – This form is used to reserve a name for the LLP.
FILLIP – This form is for the purpose of incorporation of LLP.
Form 5 – This form is a notice regarding the name change of the company.
Form 17 – This form is for the application for the conversion of a firm into a LLP.
Form 18 – This form is for the application for conversion of a private or unlisted public company into a LLP.
Post registration Compliances for Limited Liability Partnership LLP companies
The Post Incorporation Compliance – After the completion of the registration procedure of the LLP, the freshly incorporated LLP has the following compliances to follow:
- Filing the Partnership Agreement
- Applying for PAN and TAN
- Opening a Bank Account
Annual Compliance Requirements – The annual compliances are meant to be met compulsorily irrespective of whether the company has started or not, once the registration process is complete.
- Statement of Account and Solvency
- LLP annual returns
- Income tax returns
There are also Penalty Provisions in case of an LLP Annual Compliance Default, which are as follows:
- As per the Limited Liability Partnership Act, 2008, there is a penalty for any failure in registering Form 8 and Form 11 for the purpose of reporting the financial statements and annual returns of the LLP. For each agreement that goes unregistered, there is a fixed penalty amount of Rs. 100 per day. There isn’t any maximum limit specified.
- Each and every registered LLP is expected to file their income tax returns along with the annual filing, which should be done by the 30th of September every year. Any failure to do so results in a penalty of Rs. 5000 and the filing must be then completed by 31st December of the same year. In case the LLP still fails to meet the deadline, the penalty will double in amount to Rs. 1000.
Fees and other charges for registration of Limited Liability Partnership (LLP) in India
|Step 1 – DSC or Digital Signature||Around Rs.1500-2000 for 2 designated partners|
|Step 2 – DIN/DPIN||Rs. 1000 for 2 designated partners as a part of FILLIP|
|Step 3 – Name Reservation||Rs. 200|
|Step 4 – Incorporation fees||Varies on the basis of capital contribution.
Capital upto Rs. 1 lakh – Rs. 500
Capital more than 1 lakh but less than 5 lakhs – Rs. 2000
Capital more than 5 lakhs but less than 10 lakhs – Rs. 4000
Capital above 10 lakhs – Rs.5000/-
|Step 5 – LLP Agreement||
Varies on the basis of capital contribution and state laws
All in all, it is not much of a hassle to get a Limited Liability Partnership registered in India if you know the complete process. Seedup.in helps you professionally and to not only simplify the process but also guide you with clauses and tips that helps you incorporation of the LLP and drafting the Limited Liability Partnership deed or agreement, keeping in view different aspects relevant in the long term.
Our professionals walk along with the startup and pave the smooth path for successful funding and growth of the limited Liability Partnership in India.
If you are all set for registering a Limited Liability Partnership or LLP, then we are happy to initiate the process. Here’s what all you will get under seedup.in LLP package:
- DIN/DPIN will be provided for two partners.
- Digital Signatures for two partners will be provided.
- Assistance in name search and getting approval.
- The LLP Agreement will be provided.
- The ROC fee will be and PAN card will be provided.