A Limited Liability Partnership (LLP) is a legal business structure that blends the benefits of a traditional partnership with the limited liability of a company. In LLP, partners are not personally responsible for the debts of the business, offering protection to their assets. It is ideal for small to medium-sized businesses due to its flexible management structure and fewer compliance requirements. LLPs are governed by the Limited Liability Partnership Act 2008 in India.
KEY FEATURES OF LLP FIRM REGISTRATION:
- Separate Legal Entity: - An LLP is a legal entity separate from its partners. It can own property, sue, and be sued in its own name.
- Limited Liability of Partners: - The liability of each partner is limited to their agreed contribution. Personal assets are generally protected.
- Flexible Management: - Partners can decide internal structure and responsibilities through an LLP agreement, allowing operational flexibility.
- No Minimum Capital Requirement: - There is no mandatory minimum capital for forming an LLP, making it suitable for startups and small businesses.
- Perpetual Succession: - The LLP continues to exist regardless of changes in partners, ensuring continuity of the business.
- Tax Benefits: - LLPs are taxed as partnership firms and do not pay dividend distribution tax, unlike companies.
Documents required for the Incorporation of an LLP Registration online
1. ID proof of proposed Directors and members:
a. PAN card (Mandatory)
b. Aadhar card (Mandatory)
c. Passport or Voter’s ID or Driving License
2. Address proof of proposed members and directors (any one):
a. Telephone bill
b. Mobile Bill
c. Bank statement
d. Electricity bill
3. Address proof for the principal place of business of the proposed company (any one)
a. Utility bill like telephone bill, electricity bill, gas bill, water bill
b. Rent agreement with rent slip
c. Proof of ownership
LLP Registration Process:
STEP 1: NAME APPLICATION
The first step towards incorporation of an LLP is to apply for the desired name through the RUN Form on the MCA portal. MCA provides us with the option of stating two proposed names which are subject to scrutiny and approval. In case any of the two options are not approved then a chance to resubmit two other names is provided.
STEP 2: OBTAIN DIGITAL SIGNATURE CERTIFICATES (DSC)
Digital Signature Certificates for the proposed partners and designated partners are to be applied for in accordance with the applicable provisions. This step shall be undertaken simultaneously with the name application in order to safe some time. Every application for incorporation of an LLP is a completely online process and can be signed by the authorized person electronically using issues DSC only.
STEP 3: LIMITED LIABILITY PARTNERSHIP AGREEMENT REGISTRATION
Post filing and approval of the name application, the partnership deed pertaining to the proposed LLP should be meticulously drafted and printed on the stamp paper of the prescribed amount. This deed should be signed by all the partners and attested by a notary public. LLP deed generally includes the provisions related to the following points:
a. Details of the Partners: Name, Address and occupation of the partners;
b. Details of the Firm: Name of the firm, Address of the Firms, business activity to be undertaken by the firm
c. Capital: Details of Capital infused or contributed by the partners
d. Date of Commencement of the business
e. Profit-Sharing: A partnership deed should clearly describe the ratios in which the profits and loses of the firm shall be distributed.
f. Interest Clause: The deed should make provisions for interest on loans given, capital contributed and drawings made by the partners of the firm.
g. Remuneration Clause: The deed should also define the salaries, remunerations, commissions or any other form(s) of payments to be made to the partners.
h. Rights & Duties of Partners: A well-drafted partnership deed should contain provisions clearly defining the rights & duties of all the partners of the firm, whether active or inactive.
i. Changes in Partnership: The processes to be followed in case of changes in the structure of partnership or business of the partnership shall be provisioned in the deed. The deed should also define the process to be undertaken in case of retirement, cessation, death or induction of any partner in the firm.
j. Any other clauses: The deed may contain any other provisions that the partners have mutually agreed on pertaining to any aspect of the LLP deed as long as it is within the ambit of the law
STEP 4: FILING FOR INCORPORATION
One the name of the proposed LLP is approved a name approval letter is issued by the MCA. Post receiving the name approval letter the forms for the incorporation of the proposed LLP shall be prepared and filed in accordance with the provisions of the Limited Liability Partnership Agreement. The form should be accurately prepared and filed with the applicable fees.
STEP 5: FILING OF LLP AGREEMENT
On approval of the application for incorporation of the LLP a signed and notarized copy of the LLP agreement shall be filed with the respective ROC in the prescribed form (FORM 3) online. The process of incorporation is concluded with the limited liability partnership certificate of approval of the filed LLP Agreement.
Conclusion of LLP Registration
Registering a Limited Liability Partnership (LLP) is a straightforward and efficient process that offers the dual benefits of limited liability and operational flexibility. It is an ideal business structure for professionals, startups, and small to medium-sized enterprises seeking legal recognition with minimal compliance burdens. By following the step-by-step registration process through the Ministry of Corporate Affairs (MCA), entrepreneurs can establish an LLP and begin operations with legal protection and credibility.
