Limited Liability Partnership
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LIMITED LIABILITY PARTNERSHIP REGISTRATION
Mainly different kinds of budding entrepreneurs, Law Firms, Auditing Firms, Financial Advisory Services, Real Estate Agencies, Business Consultancies, and Small and Medium-Sized Businesses opt for a Limited Liability Partnership. The idea of a Limited Liability Partnership is quite convenient which is widely known and accepted. Above all, it comes with the ability to protect the personal assets if in case of any dispute and also give several tax benefits.
FORMATION OF LIMITED LIABILITY PARTNERSHIP
To increase the authenticity and genuineness of your business, getting your company registered is mandatory. A lot of perks come along by Registering a company like,
- It works as a shield that protects from other risks and losses and also from personal liability.
- Efficiently draws more customers Secures bank credits and good investment from solid investors.
- Comes with a great ability towards liability protection which protects your company’s assets
- Greater capital contribution and greater stability
- Enhances the potential to develop big and expand
- You will be getting a Zero Balance Current Account – sponsored by DBS Bank *
BENEFITS OF LIMITED LIABILITY PARTNERSHIP REGISTRATION
In India, the benefits of a Limited Liability Partnership (LLP) Registration is mentioned below:
- Limited Liability: The word “limited liability” itself indicates a liability that is limited to the range of capital contributed by each and every member. But this also implies that the personal assets of the partners will not be seized or taken in accounts if in any case of loss or disputes the firm incurs.
- Separate Legal Entity: A limited liability partnership firm holds a separate legal entity different from its members.
- Easy Ownership Transformation: In Limited Liability Partnership the ownership transfer is done easily compare to other kinds of business like a private limited company.
- Corporate Body: According to Section 3 of the Limited LLP Act, 2008, a firm should be considered as a corporate body to obtaining LLP registration.
- Perpetual Succession: A Limited Liability Partnership (LLP) has a feature of perpetual succession, which indicates the admission of a new member and departure of an existing member will not hold any effect on the existence of an LLP firm.
- No Minimum Capital Requirement: Two people without any amount in their pocket can easily start an LLP firm that, as no minimum capital requirement has been mentioned under the act regarding the incorporation of an LLP firm.
- LLP Agreement: Limited Liability Partnership agreement is a printed stamp paper rightfully signed by all the partners. This agreement outlines the roles, responsibilities, and duties of all partners working in the firm. While decision-making the Limited Liability Partnership agreement plays an important role.
- No Audit Requirement: One more vital advantage affixed with the idea of Limited Liability Partnership is that there no audit requirement. Still, In two conditions audit is required which are: a. When the annual turnover surpasses the amount of Rs 40 lakhs or b. when the capital contribution surpasses Rs 25 lakhs.
- Simple Registration Process: By introducing online registration MCA has simplified the process of obtaining LLP Registration. Through which, all the needed documents can now be filed electronically on the MCA Portal.
- Easy to wind up: In LLP, not just incorporative the firm but also the procedure of winding up is just a handful of a task. Hence, an LLP firm can easily be wound up in comparison to a Private Limited Company.
MINIMUM REQUIREMENTS FOR THE REGISTRATION OF AN LLP FIRM
To incorporate an LLP Firm the following listed requirements are to adhere:
- At least two Designated Partners
- At least one partner should be an Indian Citizen, Out of all the designated partners.
- All the designated partners need to have DIPN (Designated Partner Identification Number)
- All the Designated Partners need to have DSC (Digital Signature Certificate)
- To obtain LLP Registration Address Proof of the Registered Office is a must
PROCESS OF OBTAINING LLP REGISTRATION
The entire process of obtaining LLP Registration is mentioned below.
- Filling of the Application for LLP Registration online: An online application form for LLP Registration is needed to be filled by all the nominated partners as well as the designated partners.
- Obtaining DPIN and DSC for LLP: To complete the process of LLP Company Registration it is mandatory to have DPIN and DSC. To sign the documents digitally at least one partner must have DSC. To file DIR-3 all the designated partners are mandatorily required to obtain DPIN.
- Verification and Name Approval: The partners are required to reserve a unique and fresh name for the company, to obtain LLP Registration. Moreover, the partners are required to file an LLP-RUN form to reserve their desired firm’s name. MCA will reserve your suggested name for 90 days, and if you fail to complete the process of LLP Incorporation within 90 days then the said reservation will stand canceled. Though, it is noteworthy to note that your selected name should not be offensive and already existing in nature. You can only submit maximum two names to the ROC by way of furnishing RUN.
- Submission of the documents for LLP Registration: All the required documents are needed to be submitted by designated partners and nominated partners for the registration of LLP, once the ROC approves the name. And the documents include Aadhar Card, PAN Card, Photograph, Address Proof, etc.
- Drafting of LLP Agreement: An LLP Agreement should be drafted by the partners which will mention the responsibilities, roles, and duties of all the concerned partners, once all the required documents are submitted properly. The LLP Agreement should be filed within a period of 30days in Form 3 by online or on the MCA portal or at the concerned ROC.
- LLP Registration Certificate: All the concerned partners are required to apply for the Certificate of registration together with the LLPIN (Limited Liability Partnership Identification Number).
POINTS TO BE CONSIDER BEFORE SELECTING A NAME FOR LLP
The following listed points that must be considered while deciding a name for the concerned LLP:
- It should be easy to remember
- It should be simple and short
- It should be fresh and unique
- It should be relatable to the activities of a concerned business, i.e., must establish branding and trademark
- It should directly or indirectly not be offensive to any religion, caste, community, creed, sex, or society
- It should not be against the Public Policy
- It should not be clashing to the local/state/central government
- It should not contain any similarity towards any existing LLP name
- It should not contain any prohibited word or character
- It should have prior approval from SEBI, RBI, IRDA if in case the said name includes words like bank, finance, mutual fund, and insurance, etc
REQUIRED DOCUMENTS FOR REGISTRATION OF AN LLP
During The Time Of Incorporation LLP The Partner Need To Provide The Following Documents:
- All partner’s PAN Card, Aadhar Card, Voter ID, Driving License
- Partner’s Address Proof
- Partner’s Residence Proof
- Partners Photograph
- Passport (if in case any of the partners is a Foreign National or an NRI)
Documents Required For Limited Liability Partnership:
- Registered Office Address Proof
- DSC (Digital Signature Certificate)
- If the Registered Office is on rent then NOC (No-Objection Certificate) from the Landlord.
- Utility Bill in the form of electricity bill, a water tax receipt (which should not be older than two months)
FORMS NEEDED TO BE FILED FOR OBTAINING LLP REGISTRATION
The forms that need to be submitted for obtaining registration of an LLP are,
- RUN-LLP: The form that is required for name reservation.
- FiLLiP: The form which is required for LLP incorporation
- Form 5: This form works as a notice in case of a name change
- Form 17: An Application form which is needed for converting private limited into an LLP
- Form 18: An Application form which is needed for converting of a public limited company into an LLP
POST INCORPORATION COMPLIANCE REQUIREMENTS
There are some requirements the LLP is supposed to fulfill once LLP Company Registration is successfully accomplished. Moreover, this compliance is for one-time, and there is no need to repeat them. The compliances are followed as given below:
- LLP Agreement filing
- PAN (Permanent Account Number) and TAN (Tax Deduction Account Number) Application
- New Bank Account in the name of LLP
ANNUAL COMPLIANCE REQUIREMENTS
There are some compulsory and essential compliance that all the LLP Firm should fulfill even if their business affairs have started or not even, which are:
- Statement of Account and Solvency
- LLP Annual Return
- Income Tax Return
PENALTY PROVISION IN CASE OF NON-COMPLIANCE
- As per Section 35 of the LLP Act, 2008, the LLP is obliged to file Form 11 with the ROC for Annual Return in a limit of 60 days. And in any case, the filing process is delayed then the penalty of 100 Rupees will be charged on a daily basis.
- As per Section 34 of the LLP Act, 2008, the LLP is obliged to file Form 8 for a statement of Account and Solvency in a limit of 60 days. And in any case, the filing process is delayed then the penalty of 100 Rupees will be charged on a daily basis.
- The LLP is obligated to file an income tax return (ITR) in ITR 5. And in any case, the filing process is delayed then the penalty will be charged.
FAQS Limited Liability Partnership
The advantages of the LLP Firm are mentioned below:
- Separate Legal Entity
- Limited Liability
- Easy Ownership Transformation
- Involves Low Cost of Incorporation
- No Audit Requirement
- Adherence to Less Compliances and Regulations
- No Audit Requirement
- No Set Limit on the Minimum Capital Contribution
The disadvantages or the shortcomings an LLP Firm are listed below:
- Inability to raise Venture Capitalist Funding
- The pressure of Higher Penalty on Non-Compliance
- Huge Income Tax Rate
- Incompetent to have Equity Investment
Yes, undoubtedly the concept of LLP is more preferable than a Company. As there are various reasons as to why an LLP is better than a Company.
Any individual or a corporate body corporate can become a partner in an LLP (Limited Liability Partnership). Still, any individual who falls under the given below category will not be able to be a partner in LLP:
- If a person is declared as unsound by mind by the Court of competent jurisdiction,
- If a person is currently insolvent,
- He has applied to declare him as an insolvent, and the said application is pending.
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