What is an LLP registration?
LLP or Limited liability partnership (LLP) is a form of business organization in India. An LLP registration offers more advantages to business owners in comparison to the general partnership.An LLP offers advantages of both a company as well as of a general partnership
LLP is the preferred form of business among professional service providers and small and medium size business owners. Businesses that are family-based or closely held by few people prominently opt for an LLP registration in India.
Limited liability partnership registration is the official process of incorporation of LLP form of business organization. The business partners provide necessary documents to the Ministry of corporate affairs to obtain the certificate of incorporation.This process is executed with the help of professionals.
The Limited Liability Partnership Act, 2008 governs the conduct of LLP's. Additionally, every LLP in India needs to add the word ‘LLP’ as suffix at the end of the LLP’s name.
What are the benefits of an LLP Registration in India?
The liability of all the partners is limited in an LLP. The personal assets of the partners will not be confiscated to pay the losses incurred by the company.
Limited liability also means that the partner is immune to the consequences that arise as a result of the wrongdoings of other partners.
No minimum capital requirement
There is no minimum capital requirement for incorporating an LLP.
No audit requirement
There is no requirement for an audit in case of LLP's unless the annual turnover crosses the limit of 40 lakhs INR or the capital contribution exceeds 25 lakhs INR.
Easy transfer of ownership
There is a facility for easy transfer of ownership in an LLP. Unlike, the traditional partnership, the introduction of a new partner does not affect its existence.
Separate legal entity
An LLP is a separate legal entity in its capacity. It follows the principle of perpetual succession. The addition of a new partner or an exit of existing one does not dissolve its existence. Additionally, the assets of the business are not owned by the partners.
Minimum Requirements to Register an LLP Firm
Minimum of two designated partners
Minimum of two designated partners is necessary for LLP registration. However, there is no limit for the maximum number of partners (Partners can be either Individual or Body Corporate).
One Indian Partner
Minimum one Designated Partner must be an Indian resident.
DPIN (Designated Partners Identification Number) for all Designated Partners
DSC (Digital Signature Certificate) for all the Designated Partners
Address proof for the registered office. (Office can be either a commercial or residential place)
What are the Necessary Documents for LLP Incorporation in India?
The following sets of documents are mandatory to register an LLP:
a. From all Designated Partners
- PAN Card: It is necessary to provide a copy of the PAN of all the partners
- Aadhaar Card: It is mandatory to provide a copy of the aadhaar card of all the partners
- Address proof: Latest Bank Statement / Telephone or Mobile Bill subscribed on the name of the proposed partner.
- Identity proof: Partners can provide Voter's ID/Passport/Driver's License at the time of incorporation.
- Photograph: Passport-sized photograph of all directors and shareholder.
- Passport: (In case of NRI or foreign national as a partner): Passport should be notarized or apostilled as applicable by the relevant authorities
b. For Proposed Registered Office (Residential or Commercial)
- Latest Registered Address Proof (electricity bill or property tax receipt or water bill or landline bill)
- NOC from the owner
- Scanned copy of Notarized Rental Agreement, if the property is on rent
What is the LLP Registration Procedure in India?
Apply for Digital Signature Certificate (DSC)
Filing of Incorporation Application
File Limited Liability Partnership Agreement
File PAN Application
If you are planning for an LLP registration in India you are required to follow the following steps:-
Step 1: Apply for Digital Signature Certificate (DSC)
The LLP registration process starts with the application to obtain DSC for all Proposed Designated Partners. These digital signatures (DSC) will be taken in use to file the LLP registration, ROC compliance forms, and Tax returns.
Step 2: Name approval
File for Name Approval form to ROC through LLP RUN (Reserve Unique Name) facility available on the MCA portal.
Maximum two names can be applied through this method. It takes a maximum of three working days to get name approval from the Registrar of LLP.
Step 3: Filing of Incorporation Application
After successful name approval of the LLP, incorporating application is required to be filed in e-Form FiLLiP. Fees for LLP registration is mentioned at the MCA website.
The Incorporation application consists details of the proposed designated Partners and all the supporting documents as attachments.
It is filed with the registrar who has jurisdiction over the state in which the registered office of the LLP is situated.
Step 4-File Limited Liability Partnership Agreement
An applicant is required to submit a duly notarized partnership agreement in Form-3 on the MCA portal within 30 days of incorporation.This step is taken after the completion of LLP registration and receipt of Certificate of Registration from MCA.
Step 5-File PAN Application
As the LLP registration procedure is completed, the applicants need to file the PAN Application for the newly registered LLP and provide with all the details and relevant documents.
Note: Earlier before filing for name reservation applicants were required to acquire Designated Partner Identification Number (DPIN). However, this requirement has been removed in LLP (2nd Amendment) Rules, 2018. Now, DPIN is directly allotted along with successful LLP registration in India by MCA.
What are the LLP Registration Fees in India?
The final expense for LLP registration in India includes the cost for4 Digital Signature Certificate (DSC) for 2 Partners, Designated Partner Identification, Number (DIN) for 2 Partners, LLP’s Name Reservation Fee, Incorporation Fee, Notary & Stamp Charge. All this along with Professional fees may cost around Rs 7999 INR.
What are the Compliance Requirements after an LLP Firm Registration in India?
a. Post-Incorporation Compliances
Once Limited Liability partnership registration is completed the newly incorporated LLP is required to complete following compliances. These compliances are one time in nature and are not repetitive.
Partnership Agreement Filing
LLP registration in India is confirmed once incorporation form is approved by the MCA. However, the registration process does not end here.
The partners are required to register the partnership agreement in Form-3. This filing has to be executed within 30 days from the date of LLP registration.
Apply for PAN & TAN
Along with MCA related filing, the LLP is also required to apply for PAN and TAN. This is as important as, without the issuance of PAN, the bank account cannot be opened.
Open Bank Account
Open LLP’s Bank Account to start a financial transaction.
b. Annual Compliances Requirements after the LLP Registration
After the completion of the formation process, LLP is required to comply with the annual compliance requirements. These compliances are mandatory to meet irrespective of the fact that they have started a business or not. If the number of transactions after the LLP registration is zero, then LLP will file NIL return.
Following returns are required to be filed:
Statement of Account & Solvency
Statement of Account & Solvency is required to be filed in LLP Form 8. This return is required to be filed by 30th October of each financial year.
This document is required to be certified by a practicing professional including a chartered accountant, company secretary or cost accountant.
LLP Annual Return
Annual Return is required to be filed with the Registrar of companies in LLP Form-11. The due date for this return is set on 30th May of each year i.e. within 60 days from the closing of every financial year.
Income Tax Return
Income Tax Return filing is another mandatory annual compliance requirement. After LLP registration every LLP is required to submit their income tax return by 30th September every year. LLP’s income tax return is submitted in prescribed Form ITR 5.
What are the Penalty Provisions in case of LLP annual compliance default?
In the case of MCA Filing
According to Limited liability partnership Act 2008, it is mandatory to file all the prescribed compliance annually. There is a provision for penalty in case of any failure in filing Form 8 and Form 11 for reporting LLP’s financial statements and annual return.
A fixed amount of Rs. 100 per day for each compliance that is not filed. No maximum limit is specified.
In the case of Income Tax Return Filings
Every registered LLP is required to do income tax return filing under Income Tax Act along with annual filing. This filing should be done by 30th September every year.
In case after LLP registration, any LLP fails to meet this deadline then a penalty of Rs. 5,000 is imposed on it and filing is to be completed by 31st December of that year.
If the LLP fails to meet even the extended deadline, then the penalty amount will double up to Rs. 10,000.