Limited Liability Partnership (LLP) Registration in India – Overview
LLP Registration in India has become a very popular form of business that provides benefits of both a Company and the flexibility of a Partnership firm. The Concept of LLP was introduced in India in 2008 by the Limited Liability Partnership Act, 2008. This model is mostly suitable for setting up small, medium-sized businesses. Limited Liability Partnership (LLP) requires two partners to incorporate; however, there is no upper limit on the maximum number of partners of LLP. And one member must be a resident of India. The rights and duties of partners are governed by the LLP agreement. The members are directly responsible for the compliance of all the provisions of the LLP Act 2008 and the provisions specified in the LLP Agreement.
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Limited Liability Partnership (LLP) Registration Package
- What we provide
- Documents required
- Certificate of Incorporation (CIN)
- Permanent Account Number (PAN)
- Memorandum of Association (eMOA)
- Articles of Association (eAOA)
- Director’s Identification Number (DIN No)
- Digital Signature (DSC)
- GST Registration
- Company 2 Name
- Companies Object
- Address Proof (Rent Agreement, Receipt, Electrical Bill, Owner Property tax)
- Director's PAN, Aadhar, Voter Card
- Director's Electrical Bill
- Director's Driving Licence or Passport (If any)
- Director's Last 6 months Bank statement
- Director's Photo
- Director's Email and Mobile
Let's look at what are the basic LLP Registration requirements.
- Minimum Two People: Two people are required to register an LLP. And there is no limit on maximum number of partners.
- No Minimum Capital: Capital in case of LLP is invested based on the need of the business and contribution to partnership by partners. The amount of capital determines the Stamp Duty.
- Resident Person requirement: One designated partner of LLP must be a citizen of India.
- Unique Name: Name of the LLP should be unique and it must not resemble the name of any existing company.
Below mentioned is the list of documents needed for LLP Registration.
- Latest passport size Photographs of all partners
- Copy of PAN Card of partners
- Copy of Identity Proof of partners (Aadhar Card, Passport, Driving License or Voter ID Card)
- Address Proof of partners (Bank Statement or Passbook, electricity bill, telephone bill or any other utility bill)
- Registered Office Address Proof:NOC from the Owner of property to use it as the Registered Office of the Company, Copy of Rent Agreement (in case rented), Documents of Property ( if owned)
- Stamp paper for LLP Agreement of State where LLP is to be registered
- 1. All the Copies of documents must be self attested by the applicant
- 2. In case of non-Indian Nationals, the documents are required to be notarized from the home country.
- 3. The Telephone Bill / Mobile Bill/Electricity Bill / Bank Account Statement must be in the name of applicant and should not be older than 2 months.
- 4. In case of documents that are in languages except English, it should be translated to English with the help of a professional translator, carrying his details (name, signature, address, and seal).
LLP Registration Procedure can be divided into three stages and the steps involved are as follows:
- Finalise Partners
- Finalise Designated Partners
- Determine the amount of capital contribution and profit-sharing ratio
- Draft Objects of the LLP
- Decide Names of the LLP
- Decide and finalise the State in which the LLP is to be registered.
Stage-II: Documentation and Registration
- Obtain Digital Signature Certificate (DSC) for Designated Partners/Members
- Obtain Director Identification Number (DIN) for all Directors
- Apply for LLP Name
- Letters of Consent from each Partner and Designated Partner
- Submit LLP Registration Documents (after name approval)
- Submission of LLP Registration Documents to the Registrar of Companies (ROC)
- Issuance of Registration and Certificate of Incorporation
- Application for PAN and TAN of LLP: PAN and TAN is to be applied
- Bank Account opening Support: An LLP must have a current account in its business name for business transactions
Stage-III: LLP Agreement
- Drafting of LLP Agreement by partners
- Filing of LLP Agreement with Registrar within 30 days of registering the LLP
- Convenient to set up: It is very easy to start an LLP and the requirements are minimal.
- No Minimum Capital Requirement: There is no minimum capital requirement in case of LLP. Capital in the form of tangible movable assets like land, machinery, or intangible form both are acceptable.
- No Limit on The Owner of The Business: For LLP minimum of two owners are required to start the business however there is no upper limit on the number of members. However, in the case of a private company, it cannot have more than 200 members.
- Lower Registration Cost: Registration cost of LLP as compared to Public or Private Company is less.
- No Requirement of Compulsory Audit: LLP is not obliged to get their books of accounts audited by a professional auditing firm. They are required to get the company audited in the case where the contribution of the LLP exceeds Rs. 25lakhs or when the annual turnover of LLP exceeds Rs. 40 lakhs.
Partnership business is registered under the Partnership Act, 1932. It is used to be a very popular form of Business Entity in India due to the simplicity of registration and easy maintenance. With the emergence of the Limited Liability Partnership (LLP) in India through the Limited Liability Partnership Act, 2008, the prominence of Partnership Business has been replaced by the LLPs.
|POINTS OF DIFFERENCE||LIMITED LIABILITY PARTNERSHIP||PARTNERSHIP|
|Law Applicable||It is registered under LLP Act, 2008||It is registered under Partnership Act, 1932|
|Governed by||Ministry of Corporate Affairs||Registrar of Companies.|
|Liability||The liability of the partners is limited to the amount invested in the company.||Since the partner and the firm is not considered as a separate legal entity. Hence, the partners are personally liable for unlimited amount of liabilities of the partnership|
|A number of partners and eligibility||- Minimum 2 and no upper limit for maximum number of partners
- No minor can be partner
|- Minimum 2 and maximum 20 members
- Minor can be a partner.
|Agreement between partners||LLP Agreement regulates the operation, management and decision-making methodologies and other activities of the LLP.||Partnership Deed regulates the operation, management and decision-making methodologies and other activities of the partnership.|
|Transferability||Shares can easily be transferred to another person after obtaining consent from all the Partners in an LLP.
The transferee cannot become partner automatically.
|Shares can be transferred to another person after obtaining all partners' consent.
Transferability of the partnership is a long process.
|Conversion||LLP cannot be converted into partnership but can be converted to Private Limited Company or Limited Company.||Conversion of partnership to LLP or Private Limited Company is a difficult process.|
|Compliance||Mandatory to file the annual return to the Ministry of Corporate Affairs.||Annual return filing not required|
Let us have a look at the difference between an LLP and a Private Limited Company.
|BASIS||PRIVATE LIMITED COMAPNY||LIMITED LIABILITY PARTNERSHIP|
|Law Applicable||Companies Act 2013||Limited Liability Partnership Act, 2008|
|Minimum share capital||No requirement for minimum share capital.||No requirement for minimum share capital|
|Members Required||Minimum two and maximum 200||Minimum two and no limit for maximum|
|Directors required||Minimum two and maximum 15||Minimum 2 designated partners and maximum is not applicable|
|Board meeting||Within 120 days of the previous board meeting. Minimum 4 board meetings to be held each year.||Not necessary|
|Statutory Audit||Mandatory||Not compulsory unless partner's contribution exceeds 25 lakhs or annual turnover exceeds 40 lakhs|
|Annual Filing||Annual statement of accounts & annual return with ROC. These are filed in form AOC 4 and MGT 7||Annual accounts and Annual returns to be filed with ROC. These returns are filed in LLP form 8 and LLP form 11|
|Transferability of shares||Shares can be transferred easily. It can only be restricted by Article of association.||Shares can be transferred by executing agreement before a notary public|
|Foreign Direct Investment||Eligible via automatic and government route||Eligible through automatic route|
|Suitability||Businesses having turnover, entrepreneurs who need external funding.||Start-ups, Business, trade, manufacturers etc.|
|Suffix||Should end with Pvt. Ltd.||Should end with LLP.|
Now let us go through some of the similarities between Pvt. Ltd and Limited Liability Partnership.
- Separate legal entity: Both of them have separate legal entity. That means Private Limited Company or LLP is treated as a separate and distinguished individual in the eyes of law.
- Benefits on taxes: Both types of business structures enjoy tax benefits of 30% from the profits.
- Limited Liability: In case of both Private Limited Company and LLP, the liabilities of the partners are limited.
- Registration Process: Pvt. Ltd registration and LLP registration are required to be registered with the Ministry of Corporate Affairs.
The processing time for registration of LLP companies takes about 15-20 working days.
The LLP Registration cost ranges from Rs. 6,000 to approx Rs. 15,000 depending on a number of factors.
If you are looking an online LLP consultant in India, TAX SEVA KENDRA is the suitable option for you. We have several years of experience in the service of LLP registration. Tax Seva Kendra has 200+branch offices in India and expanding its network. We are one of the most trusted LLP consultants in India.
Limited Liability Partnership (LLP) incorporation requires two partners, however there is no upper limit on the maximum number of partners of LLP. Of all the members any two partners should be individuals and at least one should be resident in India. The rights and duties of partners are governed by the LLP agreement. They are directly responsible for the compliance of all the provisions of the LLP Act 2008 and the provisions specified in the LLP Agreement. Tax Seva Kendra is a professional tax consultant that offers online registration at very affordable prices.
What are the requirements for LLP registration India?
The minimum requirements are:
- Minimum 2 Partners
- No minimum capital requirement
- At least 1 designated partner as Indian citizen and resident
- DPIN of all partners
Do limited liability partnerships need to be registered?
Yes, it is necessary to get it registered under the Limited liability Partnership Act, 2008.
How much time it takes to register an LLP in India?
The timeline for registration of LLP companies is approximately 15-20 working days.
Is GST compulsory for LLP?
The Central Government advised that the Limited Liability Partnerships (LLP) registered under the 2008 Act must be considered as a partnership firm or Firm under the Goods and Services Tax (GST) Act.
Can we convert LLP into Pvt. Ltd Company?
An LLP can be converted into a Pvt. Ltd Company according to the provisions included in Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014.
Which is better LLP or Pvt. Ltd Company?
LLP is preferred more as it provides benefits of both the private limited and partnership firm.
What are the disadvantages of LLP?
- Mandatory Inclusion of Indian Citizen as a Partner – An NRI/Foreign national who wants to incorporate an LLP in India must have at least one partner as an Indian citizen.
- Transfer of Ownership -If a partner wants to transfer his/her ownership rights then he/she has to obtain the consent of all the partners.
- Filing of several returns - Public disclosure is the main disadvantage of an LLP. An LLP must file Annual Statement of Accounts & Solvency and Annual Return with the Registrar every year. Income Tax Return too has to be filed.
- Non- recognition - LLPs are limited by state regulations due to which they are not allowed to be incorporated in every state as a business entity.
- Huge penalties for compliance default –The cost of non-compliance of procedural matters such as late filing of e-forms is very high which would lead to huge sum of penalties.
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