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Limited Liability Partnership (LLP) is one of the most preferred forms of organization among young entrepreneurs as it combines the benefits of both partnership firms and companies into one form of organization. Limited Liability Partnership (LLP) is an alternative corporate business form that offers the benefits on limited liability to partners at a low cost of compliance. In a Limited Liability Partnership (LLP) each partner is not responsible or liable for other partner’s misconduct or negligence.
The formation of a Limited Liability Partnership (LLP) is easy in terms of its registration and management. It is for this reason that the family-owned and closely held prefer to register as LLPs. Moreover, they have very simple compliance formalities. A special partnership is formed between two or more partners in a Limited Liability Partnership (LLP), who have limited liabilities.
Limited Liability Partnership Registration starting from obtaining digital signature certificate (DSC) to filing the LLP Agreement takes around 10-15 days. Get your business registered as LLP with MyEfilings sitting at home, without visiting government offices.
For Limited Liability Partnership Registration in India, MyEfilings is one of the most affordable service providers.
The procedure to form an LLP is very simple and does not involve much formality. At the same time, it is cost-effective with a minimum incorporation fee.
An LLP is considered as an artificial judicial person. This protects it from any effect due to the retirement, any departure, or even death of any of its partners. The Limited Liability Partnership (LLP) shall continue to exist untill it’s dissolved in accordance with the provisions of the relevant law. Partners may come and go but LLP can be easily transferred to another person.
In an LLP, your liability is limited to the extent of your agreed contribution. It also protects your personal assets from the liabilities of the business. An LLP functions based on a clearly defined agreement, which specifies your mutual rights and duties with your partners. The agreement protects you from being affected in case of any of your partner’s wrong decisions.
There is very less compliance that the Limited Liability Partnership (LLP) needs to comply with, as there is no requirement of board meetings and general meetings as compared to the company. If you are a startup or an SME, an LLP is ideal for you as it can save your cost and efforts.”
LLP Act, 2008 gives Limited Liability Partnership (LLP) the utmost freedom to manage its own affairs. Partners can have an LLP agreement and decide the way they wish to manage their LLP.
LLPs whose turnover does not exceed, in any financial year, 40 lakhs or whose contribution does not exceed 25 lakhs are not required to get their accounts audited. Hence, it is beneficial for small businesses and startups to register as a Limited Liability Partnership (LLP).
Partners are the ones who own and manage the business of the LLP. This is the difference with a private limited company where directors may be different from shareholders.
As a legal entity, a Limited Liability Partnership (LLP) is competent in owning its funds along with other properties. The LLP is considered as an actual person in which all the properties are vested and by which it is managed, controlled, and finally, disposed off. However, the property of the LLP is not the property of the partners of the LLP. Therefore, partners cannot claim on the property in case of any dispute among themselves.
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For LLP registration you need to apply with two different names with the MCA from which one of the names is selected and approved which is in line with the main object.
All the documents for LLPs are filed online and are required to be digitally signed. You need to apply for the proposed LLP’s designated partners’ digital signature before initiating the process of LLP company registration.
The form used for LLP incorporation is:
An LLP agreement governs the mutual rights and duties amongst the partners and also
between the LLP and its partners. An LLP agreement must be:
Congratulations!!! You are ready to start your business and take it to great heights of excellence!
It is mandatory to maintain compliance under various regulations by all the LLPs registered in India. Failure to adhere to the same may result in huge penalties.
a) Income-tax: An LLP is required to pay a tax at the rate of 30% on its entire income.
b)Surcharge: The amount of income-tax (as computed above) shall be further increased by a surcharge at the rate of 10% of such tax, where total income exceeds one crore rupees. The amount of income tax and the applicable surcharge shall be further increased by education cess and secondary and higher education cess calculated at the rate of four percent of such income tax and surcharge.