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LLP stands for Limited Liability Partnership. LLP stands as the combination of both Partnership and Company in one format of organization. It is governed by the Limited liability Partnership Act, 2008, and authority over its Ministry of Corporate Affairs. This article describes the complete LLP Registration process.
It gives the benefits of the company, such as limited liability to the partners. Their liability towards creditors is limited to the extent of their share held with them. It negates the impact of a Partnership, where the partners are personally liable to the creditors. The benefit of a Partnership is that it can be started with a minimum of two partners.
|S.N.||Contribution by LLP||Fees Paid (rs)|
|4.||10,00,000 and above||5,000|
LLP Registration process is simple and transparent since it has the blend of a traditional Partnership and a company.
Every intending partner of the LLP has to apply for the allotment of the Designated Partner Identification Number. Limited Liability Partnership rules as amended by the MCA, where DPIN has been amended to DIN. Every partner has to apply for DIN now. The fee for the application is Rs. 100/–.
For DIN, the following documents have to be obtained:
2. Register Digital Signatures of the Partners
In an Limited Liability Partnership Registration, the digital signature of two partners is required. The partners whose names have been proposed have to secure the digital signature. They are partners whose signatures have to be affixed on the e-forms as per Class 2 or Class 3 digital signature certificates. The signatures are obtained from the authorized certifying agency. Later, signatures of the designated partners have to be registered on the website of the Ministry of Corporate Affairs.
This is because the documents of an LLP are filed online, for which digital signatures of the proposed partners are to be done digitally on the papers.
3. Name Approval
For LLP Registration, the website of Ministry of Corporate Affairs is checked for name approval. There is a free web search available under RUN LLP-(Reserve Unique Name for Limited Liability Partnership) for checking the availability of the name (existing Companies/LLP). It replaces the old form, LLP Form No.1. The application can be made for maximum two names in the preference. The proposed name has to be filed after scanning the MCA website.
Details of minimum of two designated partners have to be added in the proposed LLP. One of them must be resident in India. Individual or nominees can act on behalf of the body corporate as partners, to act as a designated partner.
4. Subscription document
The total amount of capital contributed by each partner for LLP Registration has to be mentioned in Form 2. Along with this, names of the partner/ nominees/ witnesses and their signatures are to be attached. Consent of an individual partner is required where they are nominated as designated partners.
If the names like Venture Capital, Banking, Insurance, mutual fund, stock exchange, Charted Accountant, Company Secretary, etc are used an approval has to be taken in the principle of the regulatory authority, or council governing that profession should be attached with the Form No–2.
5. Cost/ Fees
The cost of incorporation for the LLP is the same as that of the Private Company.
6. Applying for PAN and TAN
The application for both the documents has to be made separately for LLP online and offline. It is made to the Income Tax department. The application is made in form no 49A and 49 B.
7. LLP Incorporation
The incorporation application was earlier filed in Form No. 2 which has been replaced to FiLLiP (Form for incorporation of Limited Liability Partnership). This incorporation application has to be filed along with DIN application.
The application has to be accompanied by subscriber’s sheet and registered office address proof. The application shall be called for the approval by CRC (Central Registration Centre).
8. LLP Agreement
LLP agreement has to be made in accordance with the LLP Act. LLP Agreement needs to be filed within 30 days of its formation/ incorporation/registration. This document can be filed within 30 days also. The document contains the rights and duties of the partners.
It can be well concluded that an LLP is a better option when compared to a partnership or a company.
The benefits which LLP provides are that there is no limitation on the maximum number of partners which is there in the private company that is, 200 members only. The other benefit is a lower cost of formation of an LLP, which is approximately from Rs. 1500 to Rs. 7000. However, the minimum price for the company is Rs.6000/–. There is no compulsion on auditing an LLP, whose turnover is more than Rs.25, 00,000/- and less than Rs 40, 00,000/–. However, it is mandatory for public and private companies. There is no compliance burden in the case of an LLP.
Read our article:Limited Liability Partnership Registration Procedure in India: A Complete Guide