What is LLP Registration?
Limited Liability Partnership (LLP), introduced in 2008, has quickly become a popular legal structure for businesses. The main aspect which distinguishes it with the General Partnership is that, as the name indicates, it limits the liabilities of its partners to their contributions to the business and also offers each partner protection from the negligence, misdeeds or incompetence of the other partners.
LLP is also cheaper to incorporate than a private limited company, requires fewer compliances and can be a smart choice from the tax perspective. However, if you’re looking to raise venture capital or attract talent with employee stock options, private limited is the way to go as LLPs cannot easily accommodate it. Hence, they are most popular with professional services firms (web designers or architects, for example) which requires no equity funding.
Documents Required for LLP Registration
TO BE SUBMITTED BY PARTNERS
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Scanned passport-sized photograph
- Specimen signature (blank document with signature [partners only])
Note: Any one of the partners must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).
FOR THE REGISTERED OFFICE
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Scanned copy of Notarised Rental Agreement in English
- Scanned copy of No-objection Certificate from property owner
- Scanned copy of Sale Deed/Property Deed in English (in case of owned property)
Note: Your registered office need not be a commercial space; it can be your residence, too.
Advantages of LLP Registration
Limited Liability
Businesses often need to borrow money. In a General Partnership, partners are personally liable for all the debt. So if it cannot be repaid by the business, the partners would have to sell their personal possessions to do so. In an LLP, only the amount invested in starting the business would be lost; their personal possession would be secure.
Reduced Compliance
An LLP is only required to file audited annual returns if it has a turnover of greater than Rs. 40 lakh or capital contribution of over Rs. 25 lakh. It also needs to communicate fewer business transactions and structural changes than a private limited company.
Tax Advantages
LLP has various significant advantages over the private limited company. For example, Dividend Distribution Tax and tax surcharge don’t apply to LLPs. Loans to partners are also not a taxable income.
FAQs on LLP Registration
- What is the eligibility of designated partners/partners in an LLP?
Any individual, or even a company or an LLP, can become a partner. However, only an individual can become a ‘designated partner’ in an LLP. - I am an NRI. Can I start an LLP business in India?
Yes, Non-resident Indians and foreign nationals who are willing to enter into an LLP partnership in India can do so, provided they submit the necessary documents after getting it notarized by the concerned authorities. Although, at least one of the designated partners in an LLP should be an Indian national. - What are the rules of starting an LLP?
Any group of persons who have or want to invest money in a business can start an LLP. A person or an investor becomes a partner, according to the LLP agreement, as provided in the Act of 2008. Also, the investors/partners are owners of the business started under the LLP. - What is an LLP agreement?An LLP agreement is one that is made between the partners and the LLP regarding the relationship between the individual partners in the LLP. An LLP agreement usually consists of management policies, inclusion of new partners, policy making strategies, and so on.
- What is the minimum number of partners required to start LLP?
According to the LLP Act, a minimum of two designated partners are required to start an LLP. The designated partners are responsible for fulfilling all the essential requirements involved in starting and running an LLP. - What kind of start-ups commonly register LLPs?
Typically, only start-ups that are not looking for a venture capital funding register for LLPs. This is because venture capitalists only invest in private and public limited companies. - Is it cheaper to run an LLP than a private limited company?
Yes, it is much cheaper to run an LLP than a private limited company, especially at your early start-up days. This is because many compliances, such as an audit, apply to LLPs only after their turnover is sizeable. Most LLPs spend about half as much as a private limited company in their first year on registrations and compliance work.
LLP Registration Process
6 WORKING DAYS
All the proposed partners will need a Digital Signature Certificate (DSC), which is necessary to get a Digital Partner Identification Number (DPIN). You are only require to provide a handful of scanned documents; and our representatives will ensure the forms are correctly filled.
12 WORKING DAYS
As soon as we apply for the DSC, we will ask you for the unique name you wish to give your LLP. These will be used to file for incorporation with the MCA. The Certificate of Incorporation will be approved at the end of this process.
2 WORKING DAYS
Every LLP needs a registered Permanent Account Number (PAN) and Tax Account Number (TAN). We will make the application online ourselves, but you will need to courier the hard copies of required documents yourself. Your PAN and TAN will be couriered at your registered office address in 21 working days.