What Is Limited Liability Partnership?

Any two or more persons can form LLP for carrying out a lawful business with a view to make profit.

LLP is combination of both structures viz. Partnership as well as a Limited Company.

LLP is formed and registered under Limited Liability partnership Act, 2008. It has some elements of Partnership and some of a Limited Company. E.g. LLP has partners just like partnership firm but the liability of theses partners is limited to their agreed contribution like a limited company.

Further LLP enjoys its separate existence from its partners and doesn’t get dissolved in case of death or incapacity of any of its partners.

What You Will Get?

  • DIN for 2 Directors

  • DSC for 2 Directors

  • Company Name Approval

  • MOA + AOA

  • Incorporation Certificate

  • Company PAN

  • Company TAN

  • Bank Account Opening Document Support

What We Need?

For Shareholders/Directors

  • PAN Card (Mandatory)
  • Aadhar Card (Mandatory)
  • Address Proof (Bank Statement, Mobile Bill, Telephone Bill)
  • Identity Proof (Passport, Driving License, Voter ID)
  • Passport size photo (scan copy)

For Registered Office

  • Ownership Proof (Electricity Bill etc)
  • Utility Bill (Gas Bill, Electricity Bill)
  • NOC (Download format)

 

Minimum Requirements for Limited Liability Partnership?

  • No capital requirement

  • Minimum 2 partners

  • DPIN for all partners

  • At least one partner as Indian Resident

What is the Process?

Incorporation as per Limited Liability Partnership (Second Amendment) Rules to be applicable from 2nd October, 2018:

Application for reservation of name

One can reserve name of the proposed LLP through new web service ‘RUN-LLP’ (Reserve Unique Name – Limited Liability Partnership). Please note that RUN LLP has replaced the Form 1 which was for application for reservation or change of name of LLP. It should be noted that DPIN/DIN/DSC would no more be a pre-requisite for Name reservation through RUN-LLP.

Application for Incorporation

Option – I

Incorporation through new Form FiLLiP (Form for incorporation of Limited Liability Partnership) WITHOUT filling Reserve Unique Name application, combining therein 3 services viz

  • Name reservation,
  • Allotment of Designated Partner Identification Number (DPIN/DIN),
  • Incorporation of the LLP

Option – II

Incorporation through new integrated Form FiLLiP (Form for incorporation of Limited Liability Partnership) AFTER filling Reserve Unique Name application, combining therein 2 services viz:

  • Allotment of Designated Partner Identification Number (DPIN/DIN),
  • Incorporation of the LLP

Attachments:

  • Where the appointed partner is a body corporate, copy of resolution on the letterhead of such body corporate to become a partner in the proposed LLP and a copy of resolution/ authorization of such body corporate also on a letterhead mentioning the name and address of an individual nominated to act as nominee/designated partner on its behalf.
  • Proof of address of registered office of LLP.
  • Subscribers’ sheet including consent.
  • Details in respect of designated partners and partners of Limited Liability Partnership.
  • Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner.
  • Approval of the owner of the trademark or the applicant of such application for registration of Trademark, if any.
  • Copy of approval in case the proposed name contains any word(s) or expression(s) which requires approval from central government.
  • Copy of approval from the competent authority in case of collaboration and connection with the foreign country or place.
  • Proof of identity and address of Applicants.

On successful submission of incorporation form along with the required documents and information, LLP gets incorporated and receives LLPIN (Limited Liability Partnership Identity Number).

Why or Why not Limited Liability Partnership?

Advantages of LLP

  • Perpetual succession :
    The LLP can continue its existence irrespective of changes in partners. Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the limited liability partnership.
  • Separate legal existence :
    The LLP is a separate legal entity. It is capable of entering into contracts and holding property in its own name. It has its own assets, liabilities and it is taxed separately as a separate assesse.
  • Limited Liability:
    LLP is liable to the full extent of its assets.Partners of LLP are liable to their agreed contribution in the LLP
  • Number of Minimum Contribution:
    There is no minimum number set to contribution to be introduced by partners.Moreover it can be in any form like tangible, movable or immovable or intangible property or other kind
  • No requirement of compulsory Audit :
    In case of LLP, there is no mandatory requirement to get its accounts audited. A Limited Liability Partnership is required to get the tax audit done only in the case that:-The contributions of the LLP exceeds Rs. 25 Lakhs, orThe annual turnover of the LLP exceeds Rs. 40 Lakhs

Disadvantages of LLP

  • Penalty for Non-Compliance of Annual filling :
    In case a LLP fails to file its Annual Return or Statement of Accounts and Solvency, penalty of Rs.100 per day per form is applicable.
  • Funds:
    As LLP do not have share capital, it cannot raise funds through equity. LLPs would have to rely on funding from promoters.Further it mostly relies upon loans from financial institutions on which LLP has to pay relatively higher cost in form of interest
  • Income tax Rate:
    Income tax rate for a company with a turnover of upto Rs.250 crores is 25%.However, LLPs are taxed at a 30% flat rate irrespective of the turnover

Compare with other options?

Headings LLP Partnership Firm Private Company Public Company OPC
Governing Law  Limited Liability Partnership Act Partnership Act, 1932 Companies Act Companies Act
Separate Legal Existence Has Separate Legal Existence Doesn’t have Separate Legal Existence Has Separate Legal Existence Has Separate Legal Existence Has Separate Legal Existence
Liability of owner Always limited Always unlimited Limited if company is limited by shares or guarantee Limited if company is limited by shares or guarantee Limited if OPC limited by shares or guarantee
Classification No such classification No such classification Limited by shares, limited by guarantee, unlimited Limited by shares, limited by guarantee, unlimited Limited by shares, limited by guarantee, unlimited
Threshold Limit No such limit No such limit No such limit No such limit Paid up share capital upto INR 50 Lakh and average annual turnover for the relevant period upto INR 2 crore rupees
Compulsory Conversion No such restriction No such restriction No such restriction No such restriction Compulsory Conversion beyond threshold limit
Nominee Requirement Not required Not required Not required Not required Yes. Required.
Succession According to LLP agreement — Shareholders are the real owners Shareholders are the real owners Nominee
Number of members/ partners Minimum 2 partners Minimum 2, Maximum 20 Minimum 2, Maximum 200 Minimum 7, Maximum no limit Only one
Directors Minimum 2 designated partners — Minimum 2, Maximum 15 Minimum 3, Maximum 15 Minimum 1, Maximum 15
Ownership Partners Partners Shareholders Shareholders Single member
Name Suffix LLP No restriction Suffix “Private limited” if company limited by shares or guarantee Suffix “limited” if company limited by shares or guarantee Suffix (OPC)
Transferability of shares  — — Restrictive transferability Only in case of incapacity of single member, nominee will be get shares.
Agreement LLPA Required Partnership Deed Not required Not required Not required
Capital Contribution by Partners In form of cash and infrastructure only Capital subscribed by members Capital subscribed by members Capital subscribed by members

After incorporation of Limited Liability Partnership?

1. File Limited Liability Partnership Agreement:

Every LLP shall file Information with regard to ‘Limited Liability Partnership Agreement’ with registrar within 30 days from the date of incorporation.

2. Apply for the LLP PAN: 

3. Open LLP Bank Account:

  • Copy of the LLP agreement
  • Copy of the Incorporation document and DPIN of the designated partners
  • Copy of the LLP Registration Certificate issued by the ROC
  • Copy of LLP-IN issued by the ROC
  • Copy of the Resolution to open a bank account
  • List of authorized person/s with the specimen signatures to operate the account duly attested by Designated Partners
  • Copy of PAN allotment letter
All documents must be signed by a Designated Partner and must have the seal of the LLP.
4. Annual Filing LLP Annual Return:

  • Every limited liability partnership shall file an annual return with the Registrar within 60 days of closure of its financial year i.e. on or before 30th May every year.
  • A Statement of Accounts and Solvency shall be filed by every LLP with the Registrar on or before 30th October every year
  • Income tax return before 31st July – for the LLPs without tax audit
  • Income tax return before 30th September – for the LLPs with tax audit.
  • Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner.

FAQ