LLP Company Registration: Everything You Must Know
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LLP Company Registration is one of the most preferred forms of organization among Indian entrepreneurs. LLPs were introduced to Indian society in 2008. In India, LLPs are governed by the Limited Liability Partnership Act, 2008.
In this article, we will learn everything about LLP. Let’s begin…
What is LLP?
An LLP is a partnership firm governed by an agreement between two or more partners. Like a company, an LLP has perpetual succession and limited liability for its partners.
Number of partners:
A minimum of 2 partners are required. A limited liability partnership, however, is not limited to how many partners it can have.
Features of LLP Formulation
- LLPs have a perpetual existence, which means they continue to exist even if partners leave.
- An LLP is a legal entity
- As part of the incorporation process, a profit-sharing ratio and capital contribution ratio are detailed in the agreement.
Benefits of LLP Company Registration
- LLP registration is relatively inexpensive.
- The legal identity of LLPs is also distinct.
- LLPs can be formed for a relatively low cost.
- Reduced compliance burden
- LLPs combine the advantages of partnerships and corporations.
Checklist for LLP registration
- A minimum of two partners is required.
- Each designated partner receives a DSC.
- All designated partners need a DPIN.
- LLP name must be unique and not similar to any other LLP or trademark.
- Partnership capital contribution.
- The partners have an LLP agreement.
- A copy of the LLP’s registered office.
What documents are required for LLP formulation?
Documents required for LLP Company Registration in India include:
- Partner’s PAN card
- Partners’ address proofLLP’s proposed Registered Office Utility Bill
- Certificate of Landlord’s No-Objection
Income Tax Return (ITR) Filing: Documents Required
The following documents must be gathered before the taxpayer can begin the process of e-filing the ITR:
- Permanent Account Number (PAN)
- Form 26AS and other relevant statements
- Bank statements
- Form 16
What is the procedure for Limited Liability Partnership Formation?
Step #1: Obtain partners’ Digital Signature Certificates
LLP Partners must obtain a Digital Signature Certificate (DSC) to get DINs (Director Identification Numbers or Designated Partner Identification Numbers). It is therefore necessary for the proposed Partner to obtain a Digital Signature Certificate. DSCs can be obtained within one day after a DSC Application is filed with IndiaFilings. Usually, digital signatures are valid for one or two years, which is long enough for you to use them when filing documents online with the Ministry of Corporate Affairs (MCA).
Step #2: Obtain Partner’s DIN Number
As soon as Digital Signatures have been obtained for the Partners, Director Identification Numbers (DIN) can be applied for. DIN applications are usually approved immediately, but sometimes additional documents are required to be submitted to the DIN Cell for approval. They can both be used interchangeably. A DIN can only be held by one person, and once obtained, it doesn’t need to be renewed.
Step #3: Obtaining Name Approval
Upon receiving two DINs, an application for name reservation can be made to the MCA. To ensure speedy approval, the promoters should follow the LLP Naming Guidelines and suggest suitable names for the LLP. When the MCA receives the reservation of name application, it will be processed by the Registrar of Companies (ROC) in the State of Incorporation. According to the workload, ROCs process name approval applications differently.
Step #4: Filing for Incorporation
As soon as the MCA accepts the application for name approval, LLP name approval letters will be issued to the proposed Partners. 60 days is then granted to the Partners for the filing of the incorporation documents and registration of the LLP.
It would be necessary to present proof of ownership of the registered office when filing for the formation of an LLP. To register a limited liability company, the registered office documents and subscriber’s sheet must be submitted to the MCA after they have been prepared.
Process after acceptance of LLP Registration
Upon approval of the application for Limited Liability Partnership Registration, the Registrar will issue the certificate of incorporation. An LLP will be considered registered once it receives its incorporation certificate, which allows it to apply for PAN. In the next 30 days (about 4 and a half weeks), the LLP’s partners need to file the Partnership Deed. LLP Partners who fail to file their Partnership Deed within 30 days will be fined.
Contents of LLP Agreement
The Agreement will contain the name of the LLP, the partners’ names and addresses, the business objective, the location of the business, as well as other essential details about the LLP. In addition, there will be clauses regarding contributions and interest on contributions, profit sharing ratios, rights and duties of partners in cases of admission, resignation, retirement, cessation, and expulsion, and the LLP’s governance rules.
A stamp duty payment will be made after the partners have reviewed and agreed upon the LLP Agreement. As part of the execution of the agreement, stamp duty must be paid, which varies depending on where the LLP’s registered office is located. Once the partners and witnesses have signed the agreement, it will be executed.
Notes:
- MCA must receive the agreement within 30 days after incorporation. Until the date of filing, the delay will result in a penalty of Rs. 100/day.
- An LLP form-3 is used for this filing, which remains the same as it was in the previous process. Additionally, rather than the CRC handling the verification and approval, it is now the State RoC that does so instead.
- Through FiLLiP, only 2 DPINs/DINs can be assigned. If there are more than two partners, DIR-3 must be filed after incorporation to obtain the DPIN/DIN. As necessary, the LLP needs to add Designated Partners or change Partners’ designations.
What is the Penalty?
- Anyone who makes a statement is subject to penalties under section 11(3).
- Falsifying it, or knowing it to be false
- Having no faith in its validity,
- The fine must not be less than $10,000 and cannot exceed $5,000,000. Also, one can get 2 years of imprisonment.
How much time is required for LLP Registration?
How Legal Vistaar Can Help You in the LLP Registration Process?
Legal Vistaar is a team of legal consultants who have years of experience in LLP formation, ITR filing, FSSAI Licensing, and many other legal services. We provide practical solutions to individuals, start-ups, and other businesses to maximize their growth.
What makes Legal Vistaar – The Best Legal Consultants?
- Team of Experts with friendly behavior
- Commitment to excellence, diversity, and innovation
- Ensure the safety of your personal documents
- 24*7 Available
Conclusion
A limited liability partnership is designed to prevent a partner from being held accountable for the recklessness or wrongdoing of another. A limited liability company also allows its owners to run their businesses directly and offers limited liability protection for them against the obligations of the LLP.
In conclusion, as shown in the article, early-stage enterprises must register as LLPs to take advantage of the financial incentives and registration advantages. When it comes to the LLP Registration Process, the Legal Vistaar team of knowledgeable and skilled professionals will be able to help and guide you. Legal Vistaar provides LLP registration, company registration, GST registration, and trademark registration for new businesses.
FAQ
Is LLP registration mandatory?
An LLP must be registered on the Ministry of Corporate Affairs (MCA) portal. The Limited Liability Partnership Act (LLP Act) requires an LLP to register to operate legally.
LLP vs. Partnership Firm, what is the difference?
In order to conduct business, an LLP must register under the LLP Act. According to the Partnership Act, of 1932, partnership registration is voluntary. In an LLP, each partner is only liable for the contributions they make. In a partnership firm, however, every partner is personally responsible for any losses/debts.
An LLP is a separate legal entity, which means that it can own property and sue and be sued on its behalf. Partners cannot buy properties or sue anyone under the partnership firm’s name. As there is no separate legal entity for a partnership firm, it must be in the name of the authorized partner.
How to become a partner in an LLP?
The agreement of the LLP provides that any individual partner can become a designated partner by consenting. Designated partners cannot be corporate bodies. If the LLP agreement specifies that all partners can be designated partners, then all partners can become designated partners.
What types of people can be partners in an LLP?
In an LLP, anyone can become a partner. The LLP can, however, not be partnered by minors, unsound minds, or insolvents who have not been discharged.
How many members are required to form LLP?
It is mandatory for every LLP to have two designated partners, and one of them must be a resident of India. It is recommended that at least 2 members of an LLP act as designated partners. According to the agreement, anyone can easily become a designated partner.
How many members are required to form LLP?
It is mandatory for every LLP to have two designated partners, and one of them must be a resident of India. It is recommended that at least 2 members of an LLP act as designated partners. According to the agreement, anyone can easily become a designated partner.
How does the LLP rule 7 work?
In a limited liability partnership, each designated partner must sign the Statement of Accounts and Solvency and each designated partner is considered to be a party to its approval unless he proves that he has taken reasonable steps to prevent their approval.
Is there anyone who cannot be a partner in an LLP?
A minor is an individual under the age of 18 who is of unsound mind. A person who is insolvent. People who are prohibited from forming partnerships by law.