Limited Liability Partnership (LLP)
LLP is a different corporate business form that gives the advantages of the limited liability of a company and the transformation of a partnership. The LLP can continue its alive whatever of switch in partners. It can enter into contracts and hold property in its name. The LLP, a separate legal entity, is liable to the full extent of its assets, but the liability of the partners is limited to their agreed contribution to the LLP. Additionally, no partner is liable on account of the free or unauthorized actions of other partners. Thus, individual partners are protected from combined liability made by another partner’s wrongful business decisions or wrong doing. Mutual duties and rights of the partners within an LLP are ruled by a legal agreement between the partners and the LLP or between the partners themselves, as the case may be. The LLP is not reassured of the liability for its other obligations as a different entity. Since LLP includes elements of a corporate structure and a partnership firm composition, LLP is called a hybrid between a company and a partnership.
Eligibility Criteria of Online LLP Registration in India
To be qualified for LLP company registration in India, the following requirements must be met:
- A Limited Liability Partnership in India must have at least two partners (no upper limit).
- If a corporate body is a partner, it must be represented by a natural person.
- Each partner must agree to contribute to the pooled capital.
- At least one selected partner must be a resident of India.
- The partners must be between the ages of 18 and 65.
Benefits of a Limited Liability Partnership
|
Benefits of LLP |
Explanation |
|
Limited Liability |
The liability of partners in an LLP is limited to their investment in the business. Personal assets are protected. |
|
Flexibility and Ease of Management |
LLPs have fewer compliance requirements than companies, making management and operations more straightforward. |
|
Legal Entity Status |
LLPs have a separate legal identity from their partners. It can own assets, incur debts, and enter into contracts. |
|
Tax Benefits |
LLPs have the advantage of pass-through taxation, where profits or losses are distributed to partners and taxed only once. |
|
Perpetual Succession |
LLP has perpetual succession, meaning it continues to exist even if one or more partners leave or pass away. |
|
Greater Credibility and Trust |
Operating as an LLP may enhance credibility and trust among stakeholders, such as customers, suppliers, and lenders. |
|
Flexibility in Profit Distribution and Decision-making |
LLP agreements allow partners to customize profit-sharing and decision-making based on their respective contributions. |
|
Easy Transfer of Ownership |
The ownership interest in an LLP can be easily transferred from one partner to another, either fully or partially. |
|
Professional Autonomy |
Professionals like lawyers, accountants, and architects can retain professional autonomy and jointly manage their practice. |
|
Confidentiality |
LLPs provide a certain degree of privacy as financial statements are not required to be disclosed publicly. |
Documents Required for the Online LLP Registration in India
The following documents are required for online LLP registration in India:
- Address Proof of the Partners
You must attach the partners’ address proof when filing an incorporation form. You can submit your Voter ID, Passport, Aadhar card, and driving license for the Identification of each partner. You must submit all partners’ addresses, identification proof, and the incorporation form.
- PAN Card of the Partners
A permanent account number (PAN) is the most crucial document for the incorporation of an LLP because you have to attach the document along with the incorporation form. PAN is the permanent account number issued by the income tax department of India. If you don’t have a PAN card, then you have to apply for a PAN card. You can get your permanent account number by filing online for PAN registration. A PAN card is an essential document for filing income tax and is required for opening an account in a bank.
- Utility Bill for the LLP’s intended Registered Office LLP
You have to submit the utility bill of the proposed registered office of the LLP along with the incorporation form. You can submit your electricity bill, telephone bill, or another bill to the proposed registered office of the LLP. It shows that you are running a registered office of the LLP.
- No-Objection Certificate from the Landlord
If you are considering starting an LLP and want to start your business at a rented place, you must submit a No-Objection certificate and an incorporation form. Suppose you don’t have a No-objection certificate. In that case, you have to take permission from your landlord and have to get a no-objection certificate in which the landlord certifies that he has no objection if you carry out any business activity in his place.
- LLP Agreement
An LLP agreement is required for the LLP because you have to submit an LLP agreement within 30 days of incorporation of your LLP. You don’t have to submit this along with your incorporation form but must submit this document before 30 days of incorporation of the LLP. LLP agreement is the most important document because without it is a compulsory document that needs to be submitted within in period. An LLP agreement is an agreement between all partners which contains all the terms and a condition of the LLP and the agreement includes all details of the LLP. All the partners should sign it, which should be notarized and printed on stamp papers.
- Photograph
You have to stick a passport-size photograph along with the registration form, and also you have to stick a passport-size photograph on the LLP agreement.
- Rental Agreement Copy between the LLP and the Landlord
If you are considering starting an LLP in a rented place, you must submit your rental agreement copy and the LLP registration form. You can make a rental agreement on stamp paper which the landlord should sign. So, you have to submit the rental agreement copy and documents for LLP registration.
- Passport
If your firm has NRI (Non-residential Indian) partner, then you have to submit the passport of that partner along with the registration form. AN NRI can become a partner in an LLP firm, but he has to submit his document to the MCA; a passport is compulsory for an NRI partner.
The work needed for LLP registration may differ depending on the state in which the LLP is registered. It would help if you spoke with a legal professional or an experienced accountant to ensure compliance with all legal requirements and document submissions.
What are the Registration Formalities Relating to LLPs?
LLPs shall be recorded with the Registrar of Companies (ROC) chosen by the Companies Act, 1956) after succeeding the means specified in the LLP Act. Every LLP shall have a registered workplace. An Incorporation Document assisted by at least two partners shall have to be filed with the Registrar in an authorized form. Contents of LLP Agreement, as may be prescribed, shall also be required to be filed with Registrar online. Contents of the LLP Agreement or any small change made therein, if any, may be filed in Form 3, and details of partners/designated partners may be filed in Form 4 by LLP Rules, 2009.
What are the Steps to Incorporate LLP?
- Name Reservation: The first step to include in a Limited liability partnership (LLP) is the reservation of the name of the LLP. The applicant has to file eForm-1 to confirm the availability and reservation of the name of an LLP business.
- Incorporate LLP: After reserving a name, the user has to file FILLIP form for incorporating a new Limited Liability Partnership (LLP).
- LLP Agreement: Execution of LLP Agreement is crucial as per Section 23 of the LLP Act. The LLP Agreement is mandatory to be filed with the Registrar in e Form-3 within 30 days of incorporation of the LLP.
Compliances of Limited Liability Partnership (LLP)
|
Compliance |
Description |
|
Filing of LLP Agreement |
The LLP Agreement must be filed with the Ministry of Corporate Affairs (MCA) within 30 days of the incorporation. |
|
Annual Return Filing |
LLPs must file an Annual Return (Form 11) within 60 days of the close of the financial year. |
|
Statement of Account & Solvency |
Every LLP must file the Statement of Account & Solvency (Form 8) within 30 days from the end of six months of the close of the financial year. |
|
Income Tax Return Filing |
LLPs are essential to file Income Tax Returns (Form ITR-5) annually. The due date for filing is usually July 31. |
|
Statutory Audit |
LLPs with an annual turnover above a certain threshold must get their accounts audited by a Chartered Accountant. |
|
Maintenance of Books & Records |
LLPs must maintain proper books of accounts, statutory registers, and other necessary documents at their registered office. |
|
Compliance with GST Laws |
LLPs undertaking business activities liable to Goods and Services Tax (GST) must comply with GST laws, including registration, filing of returns, and payment of taxes. |
Time Taken for LLP Registration
- The time it takes to register an LLP in India is determined by several factors, including the efficiency of the Registrar of Partnerships office, the intricacy of the registration process, and the volume of applications being processed.
- An exception to this timeline is due to high office activity, documentation problems, and other administrative issues.
- The registration process can take up to 15-20 days in some situations. The length of time required to complete LLP registration varies based on the state in which the LLP is registered.
- It’s essential to know that several phases are involved in LLP registration, and each step takes time. As a result, it’s best to begin the registration process early and provide adequate time for each stage to ensure a seamless process.
How Can ApkaTax Assist You?
|
End-to-End Assistance |
Expert Legal Guidance |
Best in Class client Support |
|
We provide thorough assistance for getting your Online LLP Registration in India. |
ApkaTax offers comprehensive support for the Online LLP Registration application process, including legal assistance based on the specific priorities of our clients. |
Our dedicated support team ensures that our clients stay informed about the latest guidelines and updates regarding Online LLP Registration requirements and periodic inspections. |
FAQs on Limited Liability Partnership (LLP)
LLP shall be a corporate body and a legal entity separate from its partners. It will have perpetual succession.
LLP form is a form of business model which: (i) It is organized and operates based on an agreement. (ii) Provides pliability without imposing detailed legal and procedural requirements. (iii) Enables professional/technical mastery and initiative to combine with financial risk-taking capacity innovatively and efficiently.
As per legal provisions of the LLP Act, in the non-appearance of agreement as to anything, the mutual rights and liabilities shall be as given provided for under Schedule I to the Act. Therefore, if any LLP suggests excluding the requirements of Schedule I to the LLP Act, it would have to enter into an LLP Agreement, especially excluding the applicability of any or all paragraphs of Schedule I.
Yes, the LLP Act 2008 permits Foreign Nationals, including Foreign Companies & LLPs, to incorporate an LLP in India; given at least one designated partner is a resident of India. However, the LLP/Partners must comply with all relevant Foreign Exchange Laws/ Rules/ Regulations/ Guidelines.
Persons, who endorsed the Incorporation Document at the period of incorporation of LLP, shall be partners of LLP. After incorporation, new partners can be allowed to the LLP per the conditions and requirements of the LLP Agreement.
A person may stop to be a partner by the agreement or in the absence of the legal agreement by giving 30 days’ notice to the other partners. A person shall also stop to be a partner of a limited liability partnership- (a) On his demise or dissolution of the limited liability partnership; or (b) If he is stated to be of unsound mind by a competent court; or (c) If he has claimed to be convicted as insolvent or declared as insolvent. ROC must be notified when a person becomes or ceases to be a partner or for any partner change.
Each partner shall tell the LLP of any modification in his name or address within fifteen days of such change. In turn, the LLP would be obliged to file such information with the Registrar within thirty days of such modification in Form 4.
Sections 60 to 62 of the Act provide how compromises or arrangements, including mergers and amalgamations involving LLPs, shall be allowed.
The accounts of every LLP shall be audited by Rule 24 of LLP, Rules 2009.Such rules, inter-alia, provide that any LLP whose turnover is at most forty lakh rupees in any financial year or whose contribution does not exceed twenty-five lakh rupees is not required to get its accounts audited. However, if the partners of such a limited liability partnership agree to get the accounts of such LLP, the accounts shall be audited only by such a rule.
Every partner of an LLP would be, for the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited in case of unofficial acts, negligence, and fraud. But a partner shall not be personally liable for any other partner's wrongful acts or omission. An obligation of the limited liability partnership, if only arising in contract, else is solely the obligation of the limited liability partnership. The liabilities of the LLP shall be met out of the property of the LLP.
Register your company today
Limited Liability Partnership (LLP)
LLP is a different corporate business form that gives the advantages of the limited liability of a company and the transformation of a partnership. The LLP can continue its alive whatever of switch in partners. It can enter into contracts and hold property in its name. The LLP, a separate legal entity, is liable to the full extent of its assets, but the liability of the partners is limited to their agreed contribution to the LLP. Additionally, no partner is liable on account of the free or unauthorized actions of other partners. Thus, individual partners are protected from combined liability made by another partner’s wrongful business decisions or wrong doing. Mutual duties and rights of the partners within an LLP are ruled by a legal agreement between the partners and the LLP or between the partners themselves, as the case may be. The LLP is not reassured of the liability for its other obligations as a different entity. Since LLP includes elements of a corporate structure and a partnership firm composition, LLP is called a hybrid between a company and a partnership.
Eligibility Criteria of Online LLP Registration in India
To be qualified for LLP company registration in India, the following requirements must be met:
- A Limited Liability Partnership in India must have at least two partners (no upper limit).
- If a corporate body is a partner, it must be represented by a natural person.
- Each partner must agree to contribute to the pooled capital.
- At least one selected partner must be a resident of India.
- The partners must be between the ages of 18 and 65.
Benefits of a Limited Liability Partnership
|
Benefits of LLP |
Explanation |
|
Limited Liability |
The liability of partners in an LLP is limited to their investment in the business. Personal assets are protected. |
|
Flexibility and Ease of Management |
LLPs have fewer compliance requirements than companies, making management and operations more straightforward. |
|
Legal Entity Status |
LLPs have a separate legal identity from their partners. It can own assets, incur debts, and enter into contracts. |
|
Tax Benefits |
LLPs have the advantage of pass-through taxation, where profits or losses are distributed to partners and taxed only once. |
|
Perpetual Succession |
LLP has perpetual succession, meaning it continues to exist even if one or more partners leave or pass away. |
|
Greater Credibility and Trust |
Operating as an LLP may enhance credibility and trust among stakeholders, such as customers, suppliers, and lenders. |
|
Flexibility in Profit Distribution and Decision-making |
LLP agreements allow partners to customize profit-sharing and decision-making based on their respective contributions. |
|
Easy Transfer of Ownership |
The ownership interest in an LLP can be easily transferred from one partner to another, either fully or partially. |
|
Professional Autonomy |
Professionals like lawyers, accountants, and architects can retain professional autonomy and jointly manage their practice. |
|
Confidentiality |
LLPs provide a certain degree of privacy as financial statements are not required to be disclosed publicly. |
Documents Required for the Online LLP Registration in India
The following documents are required for online LLP registration in India:
- Address Proof of the Partners
You must attach the partners’ address proof when filing an incorporation form. You can submit your Voter ID, Passport, Aadhar card, and driving license for the Identification of each partner. You must submit all partners’ addresses, identification proof, and the incorporation form.
- PAN Card of the Partners
A permanent account number (PAN) is the most crucial document for the incorporation of an LLP because you have to attach the document along with the incorporation form. PAN is the permanent account number issued by the income tax department of India. If you don’t have a PAN card, then you have to apply for a PAN card. You can get your permanent account number by filing online for PAN registration. A PAN card is an essential document for filing income tax and is required for opening an account in a bank.
- Utility Bill for the LLP’s intended Registered Office LLP
You have to submit the utility bill of the proposed registered office of the LLP along with the incorporation form. You can submit your electricity bill, telephone bill, or another bill to the proposed registered office of the LLP. It shows that you are running a registered office of the LLP.
- No-Objection Certificate from the Landlord
If you are considering starting an LLP and want to start your business at a rented place, you must submit a No-Objection certificate and an incorporation form. Suppose you don’t have a No-objection certificate. In that case, you have to take permission from your landlord and have to get a no-objection certificate in which the landlord certifies that he has no objection if you carry out any business activity in his place.
- LLP Agreement
An LLP agreement is required for the LLP because you have to submit an LLP agreement within 30 days of incorporation of your LLP. You don’t have to submit this along with your incorporation form but must submit this document before 30 days of incorporation of the LLP. LLP agreement is the most important document because without it is a compulsory document that needs to be submitted within in period. An LLP agreement is an agreement between all partners which contains all the terms and a condition of the LLP and the agreement includes all details of the LLP. All the partners should sign it, which should be notarized and printed on stamp papers.
- Photograph
You have to stick a passport-size photograph along with the registration form, and also you have to stick a passport-size photograph on the LLP agreement.
- Rental Agreement Copy between the LLP and the Landlord
If you are considering starting an LLP in a rented place, you must submit your rental agreement copy and the LLP registration form. You can make a rental agreement on stamp paper which the landlord should sign. So, you have to submit the rental agreement copy and documents for LLP registration.
- Passport
If your firm has NRI (Non-residential Indian) partner, then you have to submit the passport of that partner along with the registration form. AN NRI can become a partner in an LLP firm, but he has to submit his document to the MCA; a passport is compulsory for an NRI partner.
The work needed for LLP registration may differ depending on the state in which the LLP is registered. It would help if you spoke with a legal professional or an experienced accountant to ensure compliance with all legal requirements and document submissions.
What are the Registration Formalities Relating to LLPs?
LLPs shall be recorded with the Registrar of Companies (ROC) chosen by the Companies Act, 1956) after succeeding the means specified in the LLP Act. Every LLP shall have a registered workplace. An Incorporation Document assisted by at least two partners shall have to be filed with the Registrar in an authorized form. Contents of LLP Agreement, as may be prescribed, shall also be required to be filed with Registrar online. Contents of the LLP Agreement or any small change made therein, if any, may be filed in Form 3, and details of partners/designated partners may be filed in Form 4 by LLP Rules, 2009.
What are the Steps to Incorporate LLP?
- Name Reservation: The first step to include in a Limited liability partnership (LLP) is the reservation of the name of the LLP. The applicant has to file eForm-1 to confirm the availability and reservation of the name of an LLP business.
- Incorporate LLP: After reserving a name, the user has to file FILLIP form for incorporating a new Limited Liability Partnership (LLP).
- LLP Agreement: Execution of LLP Agreement is crucial as per Section 23 of the LLP Act. The LLP Agreement is mandatory to be filed with the Registrar in e Form-3 within 30 days of incorporation of the LLP.
Compliances of Limited Liability Partnership (LLP)
|
Compliance |
Description |
|
Filing of LLP Agreement |
The LLP Agreement must be filed with the Ministry of Corporate Affairs (MCA) within 30 days of the incorporation. |
|
Annual Return Filing |
LLPs must file an Annual Return (Form 11) within 60 days of the close of the financial year. |
|
Statement of Account & Solvency |
Every LLP must file the Statement of Account & Solvency (Form 8) within 30 days from the end of six months of the close of the financial year. |
|
Income Tax Return Filing |
LLPs are essential to file Income Tax Returns (Form ITR-5) annually. The due date for filing is usually July 31. |
|
Statutory Audit |
LLPs with an annual turnover above a certain threshold must get their accounts audited by a Chartered Accountant. |
|
Maintenance of Books & Records |
LLPs must maintain proper books of accounts, statutory registers, and other necessary documents at their registered office. |
|
Compliance with GST Laws |
LLPs undertaking business activities liable to Goods and Services Tax (GST) must comply with GST laws, including registration, filing of returns, and payment of taxes. |
Time Taken for LLP Registration
- The time it takes to register an LLP in India is determined by several factors, including the efficiency of the Registrar of Partnerships office, the intricacy of the registration process, and the volume of applications being processed.
- An exception to this timeline is due to high office activity, documentation problems, and other administrative issues.
- The registration process can take up to 15-20 days in some situations. The length of time required to complete LLP registration varies based on the state in which the LLP is registered.
- It’s essential to know that several phases are involved in LLP registration, and each step takes time. As a result, it’s best to begin the registration process early and provide adequate time for each stage to ensure a seamless process.
How Can ApkaTax Assist You?
|
End-to-End Assistance |
Expert Legal Guidance |
Best in Class client Support |
|
We provide thorough assistance for getting your Online LLP Registration in India. |
ApkaTax offers comprehensive support for the Online LLP Registration application process, including legal assistance based on the specific priorities of our clients. |
Our dedicated support team ensures that our clients stay informed about the latest guidelines and updates regarding Online LLP Registration requirements and periodic inspections. |
FAQs on Limited Liability Partnership (LLP)
LLP shall be a corporate body and a legal entity separate from its partners. It will have perpetual succession.
LLP form is a form of business model which: (i) It is organized and operates based on an agreement. (ii) Provides pliability without imposing detailed legal and procedural requirements. (iii) Enables professional/technical mastery and initiative to combine with financial risk-taking capacity innovatively and efficiently.
As per legal provisions of the LLP Act, in the non-appearance of agreement as to anything, the mutual rights and liabilities shall be as given provided for under Schedule I to the Act. Therefore, if any LLP suggests excluding the requirements of Schedule I to the LLP Act, it would have to enter into an LLP Agreement, especially excluding the applicability of any or all paragraphs of Schedule I.
Yes, the LLP Act 2008 permits Foreign Nationals, including Foreign Companies & LLPs, to incorporate an LLP in India; given at least one designated partner is a resident of India. However, the LLP/Partners must comply with all relevant Foreign Exchange Laws/ Rules/ Regulations/ Guidelines.
Persons, who endorsed the Incorporation Document at the period of incorporation of LLP, shall be partners of LLP. After incorporation, new partners can be allowed to the LLP per the conditions and requirements of the LLP Agreement.
A person may stop to be a partner by the agreement or in the absence of the legal agreement by giving 30 days’ notice to the other partners. A person shall also stop to be a partner of a limited liability partnership- (a) On his demise or dissolution of the limited liability partnership; or (b) If he is stated to be of unsound mind by a competent court; or (c) If he has claimed to be convicted as insolvent or declared as insolvent. ROC must be notified when a person becomes or ceases to be a partner or for any partner change.
Each partner shall tell the LLP of any modification in his name or address within fifteen days of such change. In turn, the LLP would be obliged to file such information with the Registrar within thirty days of such modification in Form 4.
Sections 60 to 62 of the Act provide how compromises or arrangements, including mergers and amalgamations involving LLPs, shall be allowed.
The accounts of every LLP shall be audited by Rule 24 of LLP, Rules 2009.Such rules, inter-alia, provide that any LLP whose turnover is at most forty lakh rupees in any financial year or whose contribution does not exceed twenty-five lakh rupees is not required to get its accounts audited. However, if the partners of such a limited liability partnership agree to get the accounts of such LLP, the accounts shall be audited only by such a rule.
Every partner of an LLP would be, for the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited in case of unofficial acts, negligence, and fraud. But a partner shall not be personally liable for any other partner's wrongful acts or omission. An obligation of the limited liability partnership, if only arising in contract, else is solely the obligation of the limited liability partnership. The liabilities of the LLP shall be met out of the property of the LLP.
