Limited Liability Partnership (LLP) Registration is a partnership that has limited liabilities to some or all partners. It, therefore, showcases the elements of a partnership company and a private limited company, where the business takes place within the corporate framework, guided by mutually accepted partnership documents. In an LLP, the partner is not responsible or liable for the misconduct or negligence of another partner. The Limited Liability Partnership (LLP) partnership was introduced in India by the Limited Liability Partnership Act, 2008 and has become the preferred form of organization among the founders as it combines the interests of both a joint venture and the firm into a single entity.
Features of the Limited Liability Partnership Registration
Special Legal Entity: Limited Liability Partnership is legally recognized as a separate entity. Therefore, an LLP holds PAN, bank accounts, licenses, approvals, contracts, assets and liabilities under its unique name.
Limited Liability: Limited Liability is the extent to which their contribution to the LLP is limited to the partners and the personal assets of the partners are not used under any circumstances for the payment of the LLP’s liabilities.
Low Compliance: The tax liabilities are the same for both the private limited company and the LLP. However, when it comes to compliance with the Ministry of Corporate Affairs, the LLP reaps significant benefits. If the annual turnover of the LLP is less than Rs.50, the LLP is not required to audit its accounts. 40 lakhs, capital contribution of Rs. 25 lakhs. A private limited company on the other hand is required to file audited financial statements each year regardless of turnover.
Simplicity: The administrative process of setting up and managing an LLP is much easier compared to a private limited company.
Documents required for the LLP registration
- Copy of PAN card of designated partners
- Passport size photograph of designated partners
- Copy of Aadhar Card / Voter Identity Card / Driver License as proof of address
- Electricity / Water Bill / Telephone Bill as proof of Registered Office (Business Place)
- Limited Liability Partnership needs Document of sale / copy of property deed (if the property is owned)
- Passport (in case NRIs)
- Digital signature certificate
- Copy of notarized lease agreement
- Copy of NOC from the property owner
Procedure for the Limited Liability Partnership Registration
Step-1: Get a digital signature certificate for partners:
The first and foremost step in registering a limited liability partnership is obtaining the Partners’ Digital Signature Certificate (DSC). Any e-Form will be submitted to the Ministry after affixing the DSC signed officially for LLP Incorporation. Also, it is required for DIN application of partners.
Step-2: Name Approval Application for Limited Liability Partnership
The name of the proposed LLP should be prepared in the application form “RUN-LLP” for reservation, where a maximum of 2 names can be applied in order of preference. Please note that the names applied for will not be identical or will not resemble any existing company or LLP or registered trademark. If the proposed names are not approved by the MCA, re-submission with two other proposed names is permitted. Once the name is approved, it will be reserved for a period of 3 months from the date of approval.
Step-3: Application for Incorporation Certificate:
The form used to merge the LLP is the Philip (Form to Include Limited Liability Partnership), which is filed with the Registrar who has jurisdiction over the state where the LLP’s registered office is located. The form becomes an integrated form. Integrating the DN Assignment Application with the Incorporation Application is a very important part. Some important features of this app are:
1) A maximum of 2 designated partners (DPs) can apply under the DPN / DN application. If there are more than 2 DPs who do not have a DIN, they can be added later by following the relevant filing of Form-4.
2) With this form, name reservation can also be applied for. However, the name can be reserved through LLP-RUN or under this form at the discretion of the applicant. The application should be accompanied by the required documents including the subscriber’s sheet and the registered office address proof. The e-Form is certified by the PAN based DSC by the partners and certified by the Practice Professional (CA / CS / CWA).
The application is processed for approval by the Central Registration Centre (CRC). If the registrar deems it necessary to call for further documents or information, this can be done by ordering a resubmit. Upon approval of the online application for LLP registration, a Certificate of Incorporation (COI) will be issued in Form 16 along with the DPN / DN assigned to the designated partner. CoI also has a Limited Liability Partnership Identification Number (LLPIN). The date of the CoI will be the date on which the LLP is merged from the date of its legal existence. The business can now be started under the LLP name.
Step 4: Apply for pan and tan
Unlike in the case of a company, the application for PAN and TAN should be made separately for LLP through offline or online mode. Applications are submitted directly to the Income Tax Department. Applications will be made in Form 49A and 49B with the Certificate of Incorporation respectively as supporting proof.
Step 5: Create and file an LLP agreement
The next step is to create an LLP agreement based on the needs of the partners. Both Step-4 and Step-5 can be processed simultaneously, however, this step will take some time to complete rather than just making the application. The name of the LLP, the object of business, the place of business and all other important details are kept in the contract. Other terms include capital contribution, profit-sharing ratio, rights and partners’ obligations, etc.
Once the LLP agreement is reviewed and approved by the partners, it is executed by stamp duty payment. It is based on the relevant State Stamp Act where the registered office of the LLP is located. Finally, with the signatures of the partners and the certification of witnesses, the contract is executed. It is filed in LLP Form-3 and the certification and approval will be processed by the concerned State Rosy instead of the Central Registration Centre (CRC) as in the previous steps. The contract must be filed with the MCA within 30 days of the merger