Limited Liability Partnership Registration

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LLP Registration

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What is a Limited Liability Partnership?

Limited Liability Partnership is an organization structure, providing features and benefits of both – a corporate entity and a flexible structure. LLP registration requires the partners to associate closely with its operations. Therefore, LLP registration in India preferred by professionals, small and medium scale businesses that require the partners to operate closely with their individual efforts. Apart from the limited liability that is assured by LLP formation, a distinct feature is that one Partner is not responsible for other’s negligence.

This structure is introduced by Limited Liability Partnership Act, 2008 which governs the LLP registration process as well the compliance matters. Further, it is regulated through the LLP Agreement executed by the partners, providing flexibility to operate internally. Compared to a company, the compliance requirements are lower in case of LLP.

Benefits of LLP Registration in India

Documents required for LLP incorporation

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Formulation of LLP Name

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LLP Registration and Incorporation in 3 Easy Steps

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LLP Registration Process in India

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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 the Act is mandatory to set up business as a Private Limited CompanyRegistration under the Act is mandatory to set up business as One Person CompanyRegistration under the Act is mandatory to set up business as a Limited Liability PartnershipBoth registered and unregistered partnerships are legal, but registered entity is preferredThere is no registration criteria prescribed. But, registration to establish a legal identity is recommended
Number of members2 – 200Only 12 – Unlimited2 – 50Only 1
Requires 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 50The proprietor is the only owner of the firm
Separate Legal EntityYesYesYesNoNo
Private Company is separate entity and can own assets in its nameOPC is separate entity and can own assets in its nameLLP is separate entity from partners and can own assets in its namePartnership firm does not have any separate identity from its partnersProprietor and business are the same and not different
Liability ProtectionLimitedLimitedLimitedUnlimitedUnlimited
Liability of members is limited to the extent of unpaid value of shares subscribedLiability of member is limited to the extent of unpaid value of shares subscribedLiability of partners is limited 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 a 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
Change in members or director does not affect the existence of Private CompanyChange in members or director does not affect the existence of OPC.
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%Tax rate applicable for small companies is reduced to 25%With tax rate of 30% on business profit, tax benefits to partners is highWith tax rate of 30% on business profit, tax benefits to partners is highTax rates of individual applied to Proprietorship Firm
Statutory CompliancesHighModerateModerateLessLess
Apart from Annual filings, it has to comply with various provision laid down, but less compared to public companyApart from Annual filing, compliances are less compared to Private CompanyAnnual filing and few event based filings are necessarySeparate ITR of partnership is filed, else there is no filing requirementNo compliances and no requirement to file a separate ITR
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Frequently Asked Questions on LLP incorporation

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 an online form. In accordance with prescribed regulations for LLP formation, the partners can provide a maximum of 6 names in preferential order to reserve any one. The registrar may ask to re-submit the application with a different name if names do not fall under criteria of uniqueness, relevancy or do not fulfill 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.

Director Identification Number is a unique number assigned by the Ministry of Corporate Affairs to Individuals on whose behalf the application is made. This allows any individual to be Director in any Company or Designated Partner in LLP. Further, the concept of DPIN (Designated Partner Identification Number) does not persist anymore with respect to the LLP incorporation.

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

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