LLP Registration in India

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What is a Limited Liability Partnership?

Limited Liability Partnership is a balanced organization structure, carrying benefits conventional partnership and still limiting personal liabilities of the partners. LLPs are regulated as a contractual agreement between the partners under the Limited Liability Partnership Act, 2008. It is a popular choice for services and professional firms like Chartered Accountants, recruiting firms, consulting businesses, etc.

LLPs are similar to Private Limited Companies with respect to compliance and operational requirements. As it is recognized to be a separate legal entity than the partners, it can contract or involve in any legal proceedings in its own name. That enables the partners of an LLP to separate business liabilities or debts being recovered from their personal assets. Compliance requirement for LLPs are greater than regular partnership firms. However, Compared to a private limited company structure, LLPs have lesser compliance requirements and it is an economical option to incorporate and maintain.

As a shortfall, transfer of ownership of an LLP is not as easy as a company. Neither an LLP can issue ESOP. For the reason, LLP is not an ideal choice for startups who want to hyper-grow, seek seed investor or venture capital funding, or issue share capital to its employees.

The process of LLP Registration in India is revamped by the Ministry of Corporate Affairs. A quicker process of LLP incorporation is made available on 2nd October 2018 as part of the ease of doing business initiative by the government.

What are the key benefits of starting a business as an LLP?

Which documents are required for registering an LLP?

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LLP name structure

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What is the Right Business Structure for You?

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Private Limited CompanyOne Person CompanyLimited Liability PartnershipPartnership FirmProprietorship Firm
ActCompanies Act, 2013Companies Act, 2013Limited Liability Partnership Act, 2008Indian Partnership Act, 1932No specified Act
Registration RequirementMandatoryMandatoryMandatoryOptionalNo
Registration under Companies Act is mandatoryRegistration under Companies Act is mandatoryRegistration under LLP Act is mandatoryUnregistered partnerships are legal, but registered entity enjoys certain advantagesThere is no registration criteria prescribed. But, registration is recommended
Number of members2 – 200Only 12 – Unlimited2 – 50Only 1
Minimum 2 and not more than 200 shareholdersOnly an individual,and an Indian resident can be the shareholderNo bar on maximum number of partners, but minimum 2 Designated Partners are requiredIt is formed with minimum 2 partners, but not exceeding 50Proprietor is the only owner of the firm
Separate Legal EntityYesYesYesNoNo
It is a separate entity and can own assets in its nameIt is a separate entity and can own assets in its nameIt is a separate entity and can own assets in its nameIt does not have any separate identity from its partnersProprietor and business are considered the same
Liability ProtectionLimitedLimitedLimitedUnlimitedUnlimited
Limited up to the total value of shares subscribedLimited up to the value of shares subscribedLimited up to the capital amount agreed to introducePartners are jointly and severally liable to pay the debts of the Partnership FirmProprietor’s liability is to pay-off all the debts and obligation of the firm
Statutory AuditMandatoryMandatoryDependentNot mandatoryNot mandatory
Auditor must be appointed within the 30 days of incorporationAuditor must be appointed within the 30 days of incorporationApplicable when turnover exceeds INR 40 Lakh or contribution exceeds INR 25 LakhStatutory audit not applicable. Tax audit may be applicable based on turnoverStatutory audit not applicable. Tax audit may be applicable based on turnover
Ownership TransferabilityRestrictedNoYesNoNo
Shares can be transferred with the consent of other ShareholdersShares are not transferable easilyOwnership can be changed with consent of other partnersOwnership is not transferable easily, clause of partnership deed should be referredFirm is no different from proprietor and so ownership is not transferable
Uninterrupted ExistenceYesYesYesNoNo
Perpetual existence as the management and owners are different. Ownership is easily transferablePerpetual existence.
The nominee will take place of member
Change in Partners or Designated Partners does not affect the existence of LLPChange in partner leads to dissolution or formation of another partnership firmDeath or insolvency of proprietor directly affects the firm
Foreign ParticipationAllowedNot AllowedAllowedNot AllowedNot Allowed
Foreign national are allowed to invest under the Automatic RouteMember, nominee and director must be an Indian residentForeign nationals are allowed, subject to FDI GuidelinesForeign nationals are not allowed to be a partnerForeign Nationals cannot commence proprietorship business
Tax RatesModerateModerateHighHighLow
Tax rate applicable for small companies is reduced to 25%, dividend distribution tax applicableTax rate applicable for small companies is reduced to 25%, dividend distribution tax applicableWith tax rate of 30% on business profit, no tax on income distribution to partnersWith tax rate of 30% on business profit, no tax on income distribution to partnersTax rates of individual applied to Proprietorship Firm
Statutory CompliancesHighModerateModerateLessLess
Companies have to meet high compliance requirementsCompanies have to meet high compliance requirementsLesser compliance requirements compared to companiesSeparate ITR of partnership is filed, else there is no filing requirementNo compliances and no requirement to file a separate ITR
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Most suitable for professionals and services businesses

LLP Registration is a blend of operational flexibilities and limited liability protection to owners. Qualifies for DIPP registration to avail startup scheme benefits

Questions You May Have on LLP Incorporation in India

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There must be at least two individuals to be appointed as Designated Partners, out of which one must be an Indian resident. Also, there is a pre-requisite to have an address of a business in India so as to register it as a registered office for your LLP.

No. There is no minimum amount prescribed to form an LLP in India. It can be started with any amount of capital demanded by the business. Although there is no minimum requirement, every partner must make a contribution financially to form LLP. The amount of capital contribution is disclosed in the LLP Agreement and amount of stamp duty is decided by the total contribution amount.

LLP name availability is as an essential part for an online LLP registration. The name of an LLP is reserved through a web based form named “LLP-RUN” (Reserve Unique Name). The partners can provide maximum of 2 names in preferential order to reserve any one. The registrar may ask to re-submit the application with different name, if names do not fall under criteria of uniqueness, relevancy or does not fulfil the necessary requirements.

There are no limitations in terms of citizenship or residential status to be a Partner in LLP. Therefore, the LLP Act, 2008 allows Foreign Nationals, including Foreign Companies & LLPs to incorporate LLP in India. The pre-requisite is to have at least one Designated Partner who is a resident of India. However, the person should be of the age 18 years. This is to ensure that the person in LLP is not a minor and competent enough to enter into contract. Also, the proposed Designated Partner shall have DIN.

The concept of DPIN (Designated Partner Identification Number) is replaced by DIN with respect to the LLP incorporation. Director Identification Number is a unique number assigned by the MCA to Individuals on whose behalf the application is made. This allows any individual to be Director in any Company or Designated Partner in LLP.
The application of DIN allotment is made with incorporation application in FiLLiP subject to maximum 2 DIN.

Digital Signature Certificate for LLP is provided in the form of a token and issued by Certified Authorities. Any form filed for incorporation of Limited Liability Partnership (LLP) in India online shall be submitted after affixing the DSC of the designated partner.

Yes, the partners must provide a place of business in India with the required list of documents. It can be both – a residential or commercial plot. In most cases, the address is used for the communication purpose by the MCA and other concerned authorities and is also published on its portal.

LLP Agreement is an agreement executed by all partners after LLP incorporation in India. The agreement prescribes all the clauses related to business, including the rights, roles, duties, and responsibilities of partners in LLP. The agreement must be filed within 30 days of the issue of a certificate of incorporation. Failure to do so will charge an additional fee of ₹ 100 per day till the date of filing.

The amount of capital contribution is taken into consideration in deciding the stamp duty on the LLP Agreement in India. The rate of stamp duty varies from State to State. The State Stamp Act will be applied depending on where the registered office is situated. The amount of ₹ 500 is included in our package cost. Further, the Notary on the Agreement is not a statutory requirement and not required by the MCA. A notary can be required by the bank officials but is not mandatory for incorporation of an LLP.

Yes, a Limited Liability Partnership registered in India can carry on more than one business subject to their relevancy. The activities must be related or in the same field itself. Unrelated activities such as Interior Designing and Legal consultancy cannot be carried under same LLP. The business activities are mentioned in the agreement and must be approved from RoC.

No, one of the essential requirements for setting up LLP is ‘carrying on a lawful business with a view to profit’. Therefore, LLP cannot be incorporated for undertaking “Not-For-Profit” activities.

The PAN and TAN used for the LLP formation can be applied once the Certificate of Incorporation of the Limited Liability Partnership is issued. The physical copy of the PAN will be received at the Registered Office once the same is dispatched by the Income Tax Department.

Statutory audit in case of LLP registration depends on the turnover and contribution of the LLP. If the LLP turnover exceeds ₹ 40 lacs and/or the capital contribution exceeds ₹ 25 lacs, the financial statements must be audited by an eligible statutory auditor.

Once online LLP registration completes, the partners must open a bank account in the name of LLP for business transactions. There is no additional requirement to be fulfilled. However, the partners must deposit the agreed amount to contribute as and when required. Furthermore, the annual compliance filing must be fulfilled every year upon LLP registration.

Yes, a body corporate can be a Partner in an LLP. However, to fulfill the requirement of minimum Designated Partner, any of the two Partners or the nominee of the Body Corporate shall act as an authorized individual on behalf of the body corporate in the LLP.

Yes, Foreign Direct Investment (FDI) is allowed in LLP under the automatic route in the sectors allowed by the Foreign Investments Promotion Board (FIPB). However, Foreign Institutional Investors (Flls) and Foreign Venture Capital Investors (FVCIs) will not be permitted to invest in LLPs. LLPs will also not be permitted to avail External Commercial Borrowings (ECB.)

Yes, an existing partnership firm or a company (unlisted) can be converted into LLP. There are many advantages to converting a partnership firm into an LLP.

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Limited Liability Partnership Registration

Clients served in Bangalore, Mumbai, Delhi, Hyderabad, Chennai, Pune, Ahmedabad and all other major cities of India. Register your LLP through 100% Online process.
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