About LLP Registration

What is an LLP?

A Limited Liability Partnership (LLP) is a special kind of business structure that combines the advantages of a company and a partnership. Like stockholders in a company, partners in an LLP have limited responsibility but also have the simplicity and flexibility of a partnership. This agreement gives the limited liability partnership (LLP) its legal personality, enabling it to operate independently of its partners and to be susceptible to legal actions as well.

Since limited liability partnerships (LLPs) protect participants' assets and have less complicated regulatory requirements than standard companies, they have gained popularity among entrepreneurs across a range of industries. The Limited Liability Partnership Act, which governs the concept of LLPs, was adopted in India in 2008 and provides a flexible and dependable choice for enterprises of all kinds.

LLP Registration Prerequisites and Eligibility Conditions

To qualify for the LLP company registration in India, you must adhere to the subsequent criteria:

• Minimum of Two Partners: In India, forming a Limited Liability Partnership requires a minimum of two partners. There is no maximum number of partners that can be involved.
• Designated Partners: Two or more chosen partners must be natural persons in order for the partnership to be in effect. These selected partners must continue to reside in India, at least one of them.
• Body Corporate Partner Nomination The designation of a natural person to serve as its representative is required if a body corporate takes on the role of a partner.
• Agreed Contribution: As specified and agreed upon, each partner must contribute the LLP's shared capital.
• Minimum Authorized Capital: The LLP is mandated to possess an authorized capital of at least Rs.1 lakh.
• Indian Resident Designated Partner: At least one designated partner of the LLP must hold a resident status in India.

Characteristics of LLP

• Legal Identity: An LLP is a distinct legal entity, just as large corporations. This indicates that, in terms of rights and obligations, it is regarded as a "person" apart from those who possess it.
• Two or more Partners: To establish an LLP, two persons must be involved. Working together and establishing the business are made easier by this teamwork.
• No Partner Cap: An LLP is not limited in the number of partners it can have, in contrast to certain other types of corporations. It is therefore simple to expand and add new partners.
• Two Designated Partners: The minimum number of "main" partners required for an LLP is two. These have to be actual people, with at least one residing in India.
• Limited Liability: One major benefit of an LLP is that each partner is exclusively accountable for their own contributions in the event of an emergency. Thus, private matters are shielded from corporate issues.
• Fewer Rules to Follow: Compared to large corporations, LLPs are subject to fewer rules and regulations. Less paperwork and less anxiety as a result.

Advantages of LLP

The advantages of a Limited Liability Partnership (LLP) are elaborated in detail below:

• Own Legal Identity: An LLP, like large corporations, is a person in and of itself. People are more willing to trust and collaborate with it because of its autonomous legal actions.
• Less Risk for Partners: LLP partners are only responsible for what they put in. They don't have to pay for all the debts or losses, which is good for their reputation.
• Savings: Compared to large corporations, starting an LLP is less expensive and subject to fewer regulations. Every year, there is less paperwork to complete.
• No Fixed Money Needed: You don't need much money to start an LLP. Partners can put in whatever amount they want.

Disadvantages of LLP

Certainly, Limited Liability Partnerships (LLPs) present numerous advantages despite a few inherent disadvantages:

• A Big Fine for Not Following restrictions: LLPs may face significant fines for failing to comply with regulations on time, while having fewer restrictions overall. An LLP is still required to report to the authorities or risk fines even if it remains silent for a whole year.
• Closing an LLP: Two partners are required for an LLP to exist. If it has less than two partners for six months, it has to quit. If it is unable to pay its debts, it may also have to close.
• Hard to Get Big Money: LLPs don't work like big companies where people invest money and become owners. This makes it tricky to get a lot of money from investors.

Documents Required for LLP Registration

To initiate the LLP company registration process, partners are required to furnish the following documents:

• ID/PAN Card Verification of Partners: Address Proof of Partners: Voter ID, passport, driver's license, or Aadhar card are among the papers that partners might present as proof of address.
• Proof of Residence for Partners: Partners must submit recent documentation, such as a phone bill, gas bill, energy bill or bank statement, from the previous two to three months.
• Photograph the other person in the size of a passport against a white background.
• For Non-Resident Indians and Foreign Nationals: Passports must be submitted by anyone planning to become a partner in an Indian Limited Liability Partnership. Furthermore, you must provide evidence of address, which can be any form of government-issued identity documentation that includes the address, including a driver's license, bank statement, residency card, etc.
• Proof of Registered Office Address: This includes the landlord's rent agreement and a no-objection certificate if the office space is rented. A recent utility bill (gas, electricity, or telephone) with the complete address and owner's name (dated two months or older) should also be submitted.
• Digital Signature Certificate (DSC): In order to digitally sign documents, at least one chosen partner needs to possess a DSC.

LLP Registration Process

Step 1: Obtain Digital Signature Certificate (DSC)

You must apply for the digital signature of the selected partners of the prospective limited liability partnership (LLP) before starting the registration process. This is due to the fact that all LLP paperwork must be digitally signed and is filed online. Therefore, digital signature certificates from government-approved certifying agencies must be obtained by the chosen partner. This is a list of those accredited organisations. The certifying agency determines the cost of acquiring a DSC. Additionally, you ought to secure a DSC class 3 category.

Step 2: Apply for Designated Partner Identification Number (DPIN)

All designated partners or those planning to become designated partners of the new LLP must apply for their DPINs. A Form DIR-3 application must be submitted in order to request a DPIN. The form requires the scanned copies of the required documents, which are often Aadhaar and PAN. A company secretary, chartered accountant, or full-time practicing cost accountant should also sign the paper.
An LLP's designated partner can only be a natural person. Therefore, only natural persons and not artificial legal entities such as companies, LLPs, OPCs, associations of persons, etc. are able to receive the DPIN.

Step 3: Name Approval

The Reserve Unique Name-Limited Liability Partnership, or RUN-LLP, is a form submitted to reserve the name of a proposed limited liability partnership. The Central Registration Centre will handle this process. However, it is advised that you use the MCA portal's free name search tool before quoting the name in the form.
Once the search criteria are filled in, the system will produce a list of names of corporations or limited liability partnerships that are similar to each other. This will assist you in selecting names that are distinct from those that currently exist. The Central Government must not find the name objectionable, nor can it be confusingly similar to any already-existing partnership firm, limited liability company, body corporate, or trademark. Only then would the registrar authorise the name.
If there are any errors, the form may be submitted again within 15 days for correction. A clause allowing for two suggested names for the LLP exists. It is necessary to submit an application for LLP incorporation within three months of the MCA approving your name.

Step 4: Incorporation of LLP

• The FiLLiP (Form for incorporation of Limited Liability Partnership) is the form used for incorporation, and it must be filed with the Registrar, who has jurisdiction over the state in which the LLP's registered office is located. The form is going to be incorporated.
• Fees as per Annexure ‘A’ shall be paid.
• If the person who is going to be appointed as a designated partner does not currently have a DIN or DPIN, this form also allows them to apply for a DPIN allocation.
• The application for allotment shall be allowed to be made by two individuals only.
• The application for name reservation may be made through FiLLiP too.
• If the name that is applied for is approved, then this approved and reserved name shall be filled as the proposed name of the LLP.

Step 5: File Limited Liability Partnership (LLP) Agreement

LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners.

• LLP agreement must be filed in Form 3 online on MCA Portal.
• Form 3 for the LLP agreement has to be filed within 30 days of the date of incorporation.
• The LLP Agreement has to be printed on Stamp Paper. The value of Stamp Paper is different for every state.