LLP Company Registration

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limited-liability

LLP Registration in India

A Limited Liability Partnership (LLP) is a unique type of business setup that blends a partnership's and a company's features. In an LLP, partners enjoy limited liability, similar to shareholders in a company, while also benefiting from the flexibility and simplicity of a partnership. This arrangement grants the LLP its legal identity, allowing it to take legal actions and be subject to legal actions separately from its partners.

LLPs have become popular among entrepreneurs in various industries because they shield partners' assets and have more straightforward regulatory requirements than traditional corporations. The concept of LLP was introduced in India in 2008 and is governed by the Limited Liability Partnership Act, offering a dependable and adaptable option for businesses of all sizes.

What are the Benefits of LLP Registration in India?

The benefits of Limited Liability Partnership (LLP) Registration in India that make it an attractive option for small and medium-sized businesses, professionals, and startups are:

  • Limited Liability – LLPs offer limited liabilities to partners, which means their personal assets are protected against the debts and liabilities of the LLP. Such partnerships safeguard the partners from personally being held liable for the dealing of other partners.
  • Separate Entity – An LLP is not same as its partners. It is a separate legal entity and has its individual identity. It can independently enter into contracts, own property, sure others, and can be sued in its name.
  • Flexibility – LLPs offer greater flexibility in terms of management and operations. Partners can outline their internal organizational structure depending on their own requirements. Since the LLP Agreement governs the rights and duties of the partners, these can be personalised to suit the business needs.
  • Marginal Compliance Requirements – Unlike other business structures like companies, LLPs have to meet fewer compliances. Annual filings and other regulatory requirements are reasonably simple, and their maintenance is also easy.
  • Tax Benefits – LLPs are taxed as partnerships and hence do not have to pay corporate tax. The profits are passed on to the partners who in turn pay taxes at individual levels, which in turn helps in tax savings.
  • Permanent Succession – LLPs continue forever. It means that the retirement, death, or bankruptcy of one of the partners does not impact its existence. LLPs continue to exist until the business is wrapped up or dissolved in accordance with the provisions of the LLP Act.
  • No Minimal Capital Requirement – Unlike companies, LLPs are not obliged to maintain any capital at the time of incorporation. Partners can willingly contribute any amount of capital to start the business as agreed in the LLP agreement.
  • Ease of Transferability – As per the agreement, LLPs offer the ease of transferring interest. It enables the business to include new partners or transfer ownership interests.
  • Preference by Professionals – LLPs is a preferred business structure by professionals such as lawyers, consultants, architects and accountants. It offers a congenial and professional work environment all the while limiting the personal liability of individual partners.
  • Globally Recognised –LLP is a globally recognised business structure and it offers domestic partners to expand their operations internationally.

What are the Requirements of Registering an LLP?

Following are the mandatory requirements for new LLP registrations in India:

  • Minimum Number of Partners – A minimum of two partners are required to register an LLP.
  • Designated Partners – A minimum of two designated partners are a must to start an LLP, one of whom must be a resident of India.
  • Digital Signature Certificate (DSC) – All designated partners are required to obtain Digital Signature Certificate from government approved agencies. DSC is essential for filing online forms at the time of the registering.
  • Registered Office – LLP must have a registered office in India, which can be a commercial, residential or industrial property. However, a proof of ownership or lease agreement must be produced at the time of registering.
  • Name – Choosing an ideal name for the LLP in accordance to the Name Guidelines as recommended by the Ministry of Corporate Affairs is a mandatory requirement.
  • LLP Agreement – LLP Agreement outlining the duties, rights, and responsibilities of partners, management structure, profit-sharing ratio, operational model stamped and notarized is a must.
  • Registration Application – Form 1 (Application for Reservation or Change of Name) and Form 2 (Incorporation Document and Statement) need to be filed with the Registrar of Companies (RoC). These forms must be filed through the official portal of Ministry of Corporate Affairs.
  • Payment of Fees – LLP registration incurs a registration-fees based on its contribution amount.
  • Verification and Approval – After validating the application and documents, the Registrar issues a Certificate of Incorporation, which completes the approval process for its incorporation.
  • Post Incorporation Formalities – Once the registration process is complete, the LLP must acquire its official Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). Besides, the LLP must meet other regulatory compliances such as opening a bank account, procuring GST registration (if applicable) and maintaining books of accounts.

Documents Required for LLP Registration

Checklist of Documents Required for Obtaining LLP Registration Certificate (For Partners):

  • PAN Card
  • Passport (Partners who are either foreign nationals or NRIs)
  • Aadhar Card/Voter ID/Passport/Driving License (Partners who are Indian citizens)
  • Updated Bank Statement or Telephone Bill/ Gas Bill/ Electricity Bill/ Mobile Bill
  • Passport Size Photographs
  • Blank Document with Sample Signature

Checklist of Documents Required for Obtaining LLP Registration Certificate (For Registered Office):

  • Electricity Bill
  • Rent Agreement duly signed by the notary
  • NoC from the owner of the property
  • Sale Deed/ Property Deed (in case the property is self-owned)

What is Process for LLP Registration?

The process for LLP registration involves the following steps:

  • File an application for name approval
  • LLP Agreement duly signed by the partners
  • Obtain the Certificate of Incorporation
  • Apply for PAN, TAN and Bank Account

LLP Compliance

LLPs registered in India have to follow various compliances as directed by the Ministry of Corporate Affairs (MCA). These include:

  • LLPs must file statutory returns including annual returns, financial statements and tax returns with the MCA.
  • LLPs with sales turnover of over INR 4o lakhs or capital of over INR 25 lakhs must comply with statutory audit.

Forms

Compliance

Due Date

Penalty

DIR-3 KYC

All members with DIN

30th September

INR 5,000 in case of DIN deactivation

Form -11

Annual returns

30th May

INR 100/day till the date of filing

Form – 8

Statements of Accounts & Solvency

30th October

INR 100/day till the date of filing