Things You Must Know About Limited Liability Partnership (LLP)

Limited Liability Partnership (LLP) being the new form of Business Structure in India,  Here are the things you should  know about LLP

  1. Separate Legal Entity and Body Corporate:   LLP has its own Name, Own Structure, Own Style, It is different from its partners, can sue or be sued in its name.
  2. Decision Makers: Minimum number of two Designated Partners are required all the time in LLP, who takes decisions in the day-to-day working of LLP, DP’s are responsible for compliance with statutory laws applicable to LLP.
  3. Capital Contribution: LLP can have any number of Partners, Partners contribute in the capital of the LLP and share profits and losses of LLP at an agreed ratio.
  4. Flexible: LLP structure is flexible in its nature, LLP agreement is its charter document, Business of LLP is run out in accordance with LLP agreement, partners agree to an agreement that how the business of LLP will be carried out.
  5. Easy Compliance: You Don’t need to give any disclosures, do not need to issue or allot shares, have an audit of account till certain limit, have statutory registers, have deadlines for meetings, take approvals for Change in name, registered office and much more.

  6. Less Tax: Distribution of Profits to partners attracts no taxes, if you distribute profits in a company it will attract Dividend Distribution Tax, Income arising to Partners as a profit shared is also exempt.
  7. Limited Liability: Liability of partners is limited to their agreed contribution, in bad times it saves you from your personal property.

How to Register Limited Liability Partnership LLP in India

Limited Liability Partnership (LLP) is an advanced form to traditional form of normal partnership having liability of partners of LLP limited to the extent to capital contributed by partners in LLP. The major benefit to incorporate an LLP is to have Limited Liability in its operations .

Often seen in bad time of business the personal assets of the partners come into stake and partners have to repay all debts even by selling personal assets. The major way to get it out is to get the benefit of Limited Liability where at the time of winding up of LLP all the assets of LLP is sold and all the liabilities of LLP are paid and afterwards if nothing left or full liabilities are not paid as par law than partners of LLP need not to pay the balance from their personal assets. Other benefit of  LLP is it also body corporate and  is a separate Legal Entity, Partners comes in and goes but LLP will always remain in existence.

Step by Step Procedure on LLP Registration in India  

Obtaining Digital Signature of all the Designated Partners of LLP

Digital signature are issued by Certifying Authority in India after due verification of applicant, Digital Signatures are used to electronically sign the documents, it is as valid as normal signature.

Obtain DIN of Designated Partners of LLP 

Designated Partners of LLP  must have Director Identification Number to become Designated Partners , In LLP DIN is also Named is Designated Partner Identification Number (DPIN) , DIN is obtained by filing Form DIR-3 with MCA. (DIN is valid for lifetime, you don’t need to apply for DIN if you have already obtained DIN.

Filing Name Approval Application 

Once DIN is Obtained Application for Approval of Name of LLP is Obtained in LLP Form 1 to ROC. Name of the proposed LLP should be unique , means if there is already a company , LLP or trademark is registered or applied , the name is simply not available.

Drafting of Incorporation Documents

Once the Name of LLP is approved Subscriber sheet, Consent of Partners form is drafted and than is Signed by all the Partners of LLP. Subscribers sheet should also be attested by Professional like Company Secretary, CA or CMA.

Filing of Incorporation Document to ROC

Along with Signed Subscriber sheet, Consent and Registered Office proof documents (Electricity Bill ,Rent Agreement/ Sale Deed  and NOC from Owner ) LLP form 2 is filed with ROC.

Incorporation of LLP

Once Form 2 gets approved , LLP gets incorporated a Certificate of Incorporation is issued and  LLP Identification Number is Allotted to LLP .

Drafting and Filing of LLP Agreement to ROC

This is Final Stage to Incorporation procedure of LLP.   LLP Agreement is prepared and printed on stamp duty of applicable value and signed by all the partners of LLP alog with signature of 2 witness.   Scanned LLP agreement is now filed with ROC in LLP form 3 within 30 Days of Incorporation of LLP.