Step By Step Guide For Limited Liability Partnership Registration

The world is at a precarious state from the economic perspective. The world market is very volatile, fluctuating from immense highs to abysmal before an investor can even settle in properly. It is these very testing conditions that tend to discourage aspiring entrepreneurs to follow their dreams and take a chance upon their business ideas. A novice can have the best business intellect in the world, but their relative inexperience can entirely run down their business. In such a situation, the provision for establishing a Limited Liability Partnership (LLP) Registration comes as a godsend.

This company is especially useful in developing and third world countries, where success in many business endeavors are not guaranteed. The provision of opening an LLP in India has had a considerable hand in improving India’s stand in the world market. The LLP was first set up in India under the Limited Liability Partnership Act of 2008. Since then, it has introduced particular rules under some exclusive jurisdictions. However, to date, the procedure for Limited Liability Partnership Registration is mostly hassle-free. Click here to learn about the LLP and its registration procedure in the next sections.

What is LLP?

An LLP is similar to most corporations and partnerships in the sense that it can involve any number of investors or members, the minimum number of which is fixed at two. The significant departure from the conventional partnership system lies in the fact that no partner will be answerable for gross negligence or misconduct on behalf of other partners. Hence the term ”Limited Liability’ was introduced. Each partner also possesses the right to handle business matters alone, without restrictions posed by other partners. The process of partnership firm is thus much more convenient than other business endeavors.

LLP is also distinctly different from Limited Partnerships in most countries. Limited partnerships burden the active founder with unlimited liability, while further partners would be passive investors and have limited liabilities.

Naturally, the LLP is unlike most other conventional businesses. Read more about the advantages of LLP in the next section.

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Advantages of LLP

The LLP comes with a set of innovative perks. The most significant of these advantages are as follows.

1. The LLP acts as a separate legal identity. Thus, the personal assets of the members are not compromised completely.
2. Since the LLP is a legal identity in itself, it can also buy, rent and lease assets in its name.
3. LLPs are subject to more flexible rules. The profits and investment can be customized based on a written agreement between members.
4. LLP requires minimal capital investment to set up. Capital can be in the form of currency, property or other assets.
5. The Govt. fees for LLP Registration are the least among all the available types of companies. (Click here to read about the fee breakup of LLP registration)
6. The compliance budgets are less stringent than other companies, and thus additional savings are possible.
7. Additional taxation for the partners, in the form of DDT, is not applicable.
8. It doesn’t require an audit compulsorily.

These were the generalized advantages of an LLP. Let’s now look at the specifics regarding LLP in India.

LLP in India

If you want to set up an LLP in India, such as an LLP Company Registration In Mumbai, you need to follow a few other rules. These extra rules are as follows.

1. The LLPs are treated similar to most other Partnership firms in terms of taxation.
2. The liability of the partners will be based upon their contribution to the LLP.
3. At least one of the partners in the company has to be an Indian citizen.
4. Provisions for mergers and acquisitions are always available to the company.
5. Hassle-free dissolution and winding up of LLPs are already in place.
6. The Registrar of Companies (RoC) has control over the registration process and the company itself to some extent.

Overall, all the previous sections serve to give you a gross overview of the LLP and its variants in India. Read more about the LLP naming rules in the next section.

LLP Registration Name Check

The LLP Registration full form stands for Limited Liability Partnership Registration, and before registering the company, you have to assign a valid name for all business purposes. The naming rules are as follows.

• The name needs to be unique and not represent any other LLP.
• Typically, the first word should be the brand name.
• A second word should describe the business activity of the firm.
• It should end with ”LLP’, signifying that it is a Limited Liability venture.
• The name should not be offensive or represent any trademark already in existence.
• The name should not be ”undesirable’ according to the list released by the Central Government.

Once you have thought of a name that fulfills all the rules, you can now proceed to the LLP registration. Know more about the LLP registration procedure in the next section.

Limited Liability Partnership Registration 

Before moving on to the registration procedure, let’s take note of the provisions required before registration. First take inventory of the documents required and also the conditions of validation, before registration.

LLP Formation Checklist  

• Photo ID proof of all partners
• Proof of residence of all partners
• Passport (in case of NRIs)
• Photographs
• Address proof of office space
• Digital Signature Certificate of LLP

LLP Compliance Checklist  

• Maintain a book of accounts for every financial year, based on the double-entry system.
• A CA must audit the accounts in case of turnover of more than 40 lakhs, or capital of over 25 lakhs.
• Annually the partnership must file two types of MCA returns, namely forms numbered 8 and 11.
• Income tax returns must be filed annually.

Govt. Fees For LLP Registration

The overall costs for the full registration process range from 3750 to 5250 INR, depending upon capital contribution.

Steps for LLP registration

1. Obtain a Digital Signature Certificate (DSC) for your Partnership.
2. Apply for a Digital Identification Number (DIN).
3. Reserve a name for your business.
4. Incorporate the partnership as per the rules.
5. Submit the LLP agreement.

Follow the steps to the T, and you shall be successfully set up your company in about fifteen days.

Conclusion

Hopefully, this comprehensive guide will be successful in answering all your doubts regarding the LLP scheme. Please comment below the article describing your experiences with LLPs, and also mention how we can improve this article.