Limited Liability Partnership

A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and Companies. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence.

The Limited Liability Partnership (LLP) form of business structure is very much suitable for professional and consultancy firm where there is indefinite amount of personal risk. By forming LLPs the risk can be reduced drastically.

The LLP form of business structure combines the benefits of companies and removes the unlimited liability of partnership firm. Tax benefits and limited liability are two of the biggest. While there are many great reasons to choose an LLP, there are also some significant draw backs to choosing this structure.



Inclusion

2 DSC of designated partners

2 DIN of Directors

DPIN of designated partners

LLP Incorporation with Registrar of Companies

Customized LLP Agreement.

VAT/SERVICE TAX/EXCISE/IEC or any other registration applicable and selected by the user.

Courier charges of sending the original certificate and Partnership deed at your address.

Any Government Fee or charges payable.

Application of PAN and or TAN

EXCLUSIONS

Inspection fee payable at the time of visit to the officer if any.

Fresh application fee if registration applicable is rejected due any discrepancies in documents of the applicant.

Post Incorporation filings of documents (other than LLP Agreement)

Any registration with government department not selected by the user.

REQUIRED DOCUMENTS

Identity and Address Proof of the Applicant partners

Copy of PAN card of partners (for DPIN and registration with Govt. departments)

Passport size Photographs of partners, if applicable

Address Proof and NOC for proposed address of LLP.

Consent letter for admission as designated partners

Any other documents according to selected registration.

TIMELINE

2 day process for gathering the necessary details and documents

2 days process of DSC application of partners

1 day process for application of DPIN

1 day process for preparing documents for submission of forms

7 days process for approval from the date of submission and providing certificate of registration.

1 day process for preparing standard LLP Agreement, (customization depends upon the time taken by client) and notarizing it from Notary Public.

7 days process of PAN application.

1 day process for getting documents ready for submission to govt. after receipt of PAN.

2 day process for submitting application to government after signing and verification of all documents.

1 day process for providing certificate after approval from relevant department and updating its status.




FREQUENTY ASKED QUESTIONS


1. What is Limited Liability Partnership?

A limited liability partnership (LLP) is a partnership among more than one person for earning profits in which some or all partners have limited liabilities. It therefore exhibits elements of partnerships and Companies. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence.

2. Whether registration of limited liability partnership firm is mandatory?

Yes for formation of limited liability partnership registration with registrar to companies is mandatory. To know the process click here.

3. What is process of registration of LLP?

Name reservation: The first step to incorporate Limited liability partnership (LLP) is reservation of name of LLP. Applicant has to file eForm 1, for ascertaining availability and reservation of the name of a LLP business.
Incorporate LLP: After reserving a name, user has to file eForm 2 for incorporating a new Limited Liability Partnership (LLP).
eForm 2 contains the details of LLP proposed to be incorporated, partners’/ designated partners’ details and consent of the partners/ designated partners to act as partners/ designated partners.

4. Can an existing partnership firm/company be converted to LLP?

Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP. In case of conversion of company into LLP complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act. Form 18 needs to be filed with the registrar along with Form 2 for such conversion. However only private limited company or unlisted public company be converted into LLP.

5. What name can be taken at time of conversion of company into LLP?

Any private company or unlisted public company can be converted into LLP. However, in this case LLP shall take same name as that of the company at the time of conversion.

6. What is minimum number of designated partners in LLP?

Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. Every LLP shall be required to have atleast two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

7. If I want to incorporate a LLP with more than 200 designated partners and partners. However, Form 2 has the limit of only 200 partners to be entered. What shall I do in that case?

Filing of addendum to Form 2 with Form 2 or addendum to Form 4 with Form 4 is required to be filed if the Total number of designated partners and partners for which the Form is filed exceed 200.

8. Whether it is mandatory to form a partnership deed/Limited liability agreement?

Yes in order to incorporate and govern the limited liability partnership it is mandatory to form a LLP agreement and further it is also mandatory to file any amendment in the agreement with registrar of company in the appropriate forms. As per provisions of the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be as provided for under Schedule I to the Act. Therefore, in case any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it would have to enter into an LLP Agreement, specifically excluding applicability of any or all paragraphs of Schedule I

9. What is minimum amount of contribution/capital required to start Limited liability partnership?

There is no upper or lower limit of making contribution in LLP, however contribution in amount is required by one or more partner in order to register the Limited Liability partnership.

10. If I have incorporated a LLP with partners numbering more than 200. How can I file the details of partners in Form 3?

A limited liability partnership willing to file the information with respect to initial LLP agreements or any changes thereto, and the number of partners exceeds maximum number allowed in the e-form, will need to enter/update the details of all partners through a screen for ‘Enter/ Update partners’ detail for filing LLP agreement’ which shall be available to the designated partners (as business partner) after login to MCA portal.

11. Can i open a bank account of Limited liability partnership?

Yes, with the certificate of incorporation and LLP agreement bank account after complying with other RBI Norms can be opened, there is no need to apply any other registration with government department like VAT or Service Tax etc.. To know more about how to open bank account click here.

12. Whether registration with government departments are mandatory ?

No, only applicable government registrations are mandatory like if sales exceed specified limit of turnover then registration with Value Added Tax (VAT), Service Tax Registration, Excise or shop and establishment as applicable are mandatory. To know about registration with government departments click here.

13. What are the maximum number of partners admitted in partnership?

The maximum number of partners than can exist in partnership is 10 in case of firm carrying on banking business and in case of any other nature of business the limit is 20. However this limit is governed by companies act and not the Indian Partnership Act, 1932.

14. What are the advantages of Start business as Limited Liability Partnership?

Advantage
AS MANY OWNERS AS NEEDED

One of the greatest things of a limited liability partnership is that there is no limit on the amount of owners that can be involved with the business. This is great because it evenly spreads out the amount of liability that each partner can have if something where to go wrong with the business.

Advantage
MUCH LESS LIABILITY

Just as the name suggests, limited liability partnerships limit your liability. Since there are multiple owners involved in the business all of the risks of the business are spread out and made much smaller than if a single person was responsible for the business on their own. This generally refers to legal issues, like if the company was sued for any reason.

Advantage
TAX BENEFITS

Like partnership firm partners can take salary from the LLP, and unlike companies it does not have to pay any tax on books profit under MAT (115JB of Income Tax Act, 1961).

Advantage
GREAT FLEXIBILITY

Flexibility is a defining characteristic of limited liability partnerships. Each partner in the business has the ability to decide how much they want to contribute and how much of a partner they truly want to be in the business. They are also not obligated to participate in business meetings or consultations with anyone that they do not feel the need to.

Advantage
Easy annual filing with ROC

Unlike companies LLPs are not required to file number of forms with Registrar of companies/Ministry of corporate affairs moreover the cost of filing is much less than the annual filing cost of companies.

15. What are the disadvantages of Start business as Partnership?

Advantage
LESS BUSINESS CREDIBILITY

Problem with limited liability partnerships is the fact that other business and many consumers or clients do not see them as a credible business. Corporations gain much more respect and are generally more successful than LLPs.

Advantage
Change in Agreement

Every change in LLP agreement is required to intimated to registrar of companies for which appropriate forms a required to be filed. It creates compliance burden although it is a safeguard of interest of all the partners.

Advantage
Filing of forms

Unlike partnership firm in LLP designated partners are required to file various forms with registrar of companies.

16. Can a Limited Liability partnership invite investor’s money?

Yes, other partners with their consent surrender their part of shareholding in other person and can admit it as partner and thus invite investor’s money. Moreover secured and unsecured loan can also be obtained by the firm from investors on interest. Further bank loans can also be brought, the banks gives more credit rating to Limited liability partnerships as compared to normal partnership firms.

17. Whether name of the LLP is protected against duplication? Or whether name of an existing LLP be used for form new LLP?

No unlike partnership firm, in case of limited liability partnership name of an existing LLP cannot be taken by any other person. If any one tries to take same name it will not be approved by the registrar of companies. So it provide protection of theft of name irrespective of whether trademark of name is taken or not.

18. Which forms are required to be filed with registrar of companies by LLP?

LLP is required to file LLP Form 8 (Statement of Account & Solvency) and LLP Form 11 (Annual Return) annually. The ‘Annual Return’ is required to be filed within 60 days of close of the financial year and ‘Statement of Accounts & Solvency’ shall be filed within 30 days from the end of six months of the financial year to which it relates. Every LLP has to maintain uniform financial year ending on 31st March of a year.

19. Why forms of LLP are required to be filed with registrar of companies?

All the formalities and procedures for filing of forms and processing is under the governance of ministry of corporate affairs and thus filings are required to be made with registrar of companies.

20. What are the due dates of filing of forms off LLP and penalties for late filing of forms of LLP?

To know more click here

21. How can i compare partnership with other form of business?

Basis Sole Proprietorship Partnership Limited Liability Partnership Pvt. Ltd Co OPC Public Limited Company
Annual income tax return filing Filing of return is compulsory only if the Gross Total income exceeds the Exemption limit. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory
Statutory Audit Not Applicable Not Applicable Not Applicable Compulsory Compulsory Compulsory
Liability Unlimited liability Unlimited liability As the name itself suggests, there is limited liability in case of limited liability partnership. Limited by Guarantee or Shares Limited by Guarantee or Shares Limited by shares
Ownership and Control One person has total control and ownership of the enterprise. Ownership and Control is through mutual agreement. Ownership and control is through mutual agreement. Ownership and control is amongst the shareholders of the co. Ownership and control is in the hands of only one member. Ownership is amongst the shareholders and control among the directors chosen by shareholders
  One Minimum 2 Minimum 2 Minimum 2 One Minimum 7
Complications Sole proprietorship is the least complicated form of business. Partnership is also less complicated as compared to company but more complicated as compared to sole proprietorship. Partnership is also less complicated as compared to company but more complicated as compared to sole proprietorship. Most complicated as compared to sole proprietorship and partnership firms. Most complicated as compared to sole proprietorship and partnership firms. Most complicated as compared to private limited company
Risk Risk is very high. Risk is high. Risk is low as liability is limited. Risk is low as shareholder’s liability is restricted to unpaid calls only or any specified amount of guarantee in case of co. limited by guarantee. Risk is low as liability is limited. Risk is low as liability is restricted to shareholding amount and unpaid calls only.
Transferability Cannot Transfer, only in case of death of proprietor New partners can be admitted and old partners can resign New partners can be admitted and old partners can resign Shares can be transferred with restrictions to public There is restriction of transfer of shares subject to change in nominee and directors Shares can be easily transferred without restriction.