Limited Liability Partnership (LLP) is a combination of partnership and company and has the features of both companies as well as partnerships. It is registered with the Ministry of Corporate Affairs (MCA) through the Registrar of companies (ROC). This is the new concept of business introduced in 2009 under the LLP act, 2008 to promote the business as a partnership. This is a very good option for startups because new entrepreneurs get the advantage of a private limited company under the form of a partnership. This form of business is regulated by proper authority that is why it attracts the investors like banks, financial institutions, venture capitalists etc.
To start the LLP Registration there is a minimum of 2 persons are required as a designated partner, but there is no limit in the addition of partners, which means there is no maximum limit in the number of partners, it can be 20 as well as it can be 500 there is no limit in that. The partner can be anyone like an Individual (whether Indian or foreign resident), or any body-corporate, government, any authority etc. There is no minimum capital required to start the business the capital amount can be any amount. And once it is registered there is no need to renew the certificate of incorporation, it is valid for a lifetime. But it has to do certain compliances every year to maintain the status of an active business entity.
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Documents Required For LLP Registration:
For Designated Partner/Partner
- Aadhaar Card
- Id proof (Voter Id/ Driving License/ Passport); anyone
- Address proof (Bank Statement/ Electricity bill/ Mobile bill/ Telephone bill); anyone but should not be older than 2 months.
For Registered office address
- Sale deed or house tax receipt if owned and rent agreement if rented
- Utility bill (electricity bill/ mobile bill/ gas bill/ telephone bill); anyone but should not be older than 2 months
- NOC from the person whose name is mentioned in the bill
Procedure to Register LLP in India:
- Name reservation: The name must be unique and not similar or identical to any existing company or LLP. In one application two names can be applied on a preference basis, the registrar will approve the name if it is available, once it is approved it is valid for 3 months and in this period the procedure must be completed otherwise the name will get expired and a fresh application for name reservation shall be made for further proceedings.
- Digital Signature Certificate: The proposed designated partners must have DSC before filing the incorporation form to the ROC. For DSC few verifications need to be made by the applicant like email, mobile & video. If all procedure is done the authority will issue a Digital signature.
- Preparation & signing of documents: After name approval, there are certain documents that are needed to be drafted and the same shall be signed by the partners of the LLP. These documents shall be filed to the registrar along with the form.
- Filing of the final form: After completion of all the above steps the final form shall be submitted to the ROC along with all required documents and information for their approval. If they are satisfied with the application, they will issue a certificate of incorporation.
- PAN application: After receiving the certification a PAN allotment application shall be made to the NSDL and they will allot the same
- Submission of LLP agreement: An agreement needs to be submitted within 30 days from the date of incorporation. This agreement shall be executed on stamp paper and the same should be notarized and signed by the partners and witnesses. The value of stamp paper shall be determined by the value of the capital contribution and the state where the registered office of the LLP is situated.
Advantages of LLP Registration:
- Separate Legal Entity: LLP has its own identity which makes it different from its partners. It can hold, rent, buy, own, sell, or deal in any way in the property in its name whether movable or immovable including trademark, copyright, patent etc.
- Limited Liability: The liability of the partners is always limited which means they are not personally liable for any debt or loss incurred by the LLP.
- Perpetual succession: The validity of the LLP doesn’t get affected by the death of the partners; it remains valid until the closure application is made to the registrar.
- No minimum capital required: There is no minimum capital requirement to start the LLP neither there is any maximum capital limit. The capital amount can be anything like Rs. 1000/- or Rs. 10,00,000/-
- Easily transferable: It is very simple to transfer the rights and liabilities to any other person, there are only a few procedures that the LLP and partners have to follow.
- Less compliance: In comparison to the public limited company the annual LLP compliances are very less, there is no need to appoint an auditor or hold a board meeting or general meeting, etc.