Limited Liability Partnership (LLP) is a type of business which is a hybrid in between a company and partnership. It is an alternative corporate business module in which the partners are liable to limited liabilities at low compliance costs. It is a legal entity which must have a minimum of two partners and is eligible for perpetual succession.
It allows the partners to organize the internal structure just like a traditional partnership. It is defined under section 2(n) of Limited Partnership Act, 2008.
LLP is quite an advantageous business module in India as it is a new concept here. Also, it has a rapidly growing business structure. The advantages of Limited Liability Partnership are as follows:
A few considerations are necessarily needs to be made before you go ahead with the plan of starting a LLP. Ensure that you are ready with the decisions of the following points:
The following documents need to be submitted in order to start an LLP:
- 1 ID Proof (PAN Card, Aadhar Card, Voter ID Card, Passport etc.)
- 1 Address Proof (Aadhar Card, Voter ID Card, Passport etc.)
- 1 Passport size Photo in softcopy
- 1 Specimen signature in soft copy
- 1 Utility Bill (Bank Statement, Mobile Bill, Electricity bill not older than 2 months)
- *In case of non residents, it should be apostilled from the notary public of that country.
- NOC from the owner of property
- Electricity or Water bill not older than 2 months
- Rent Agreement
Apply for Digital Signature of every Partner.
All the partners of the LLP need to file for a “Designated Partner Identification Number (DPIN).
In this step, we need to draft the LLP Agreement and get it framed following legal procedures.
Fill in Form 1, 2 and 3 in order to apply for LLP with the ROC.
ROC provides the LLP Incorporation Certificate once all the forms are in order and approved.
Then we need to file application for a PAN card, a TAN number and open a bank account which you will use to do the business.
DIN stands for Director’s Identification Number whereas DPIN stands for Designated Partners Identification Number. The former is to be held by the Director of the company and the latter is to be held by the Designated Partners of LLP.
It should be a unique name which has not been registered as a Private Limited Company or LLP.
We do not need to have a mandatory audit in LLP below a threshold limit of sales which is prescribed under Income Tax Act but although it is entirely your own choice to do Voluntary Internal Audit.
Physical preference is not required for the formation of an LLP. You just need to provide the soft copies of your requisite documents.
You need to revise the LLP agreement and change the profit percentage distribution amongst the partners and then file it to the ROC.
After the formation of LLP, Form 8 and Form 11 needs to be filed with ROC on yearly basis. In addition to the same, LLP also needs to comply with the other allied law like Income Tax, GST, PF, ESI, FEMA etc.
It is a written agreement formulated amongst the Partners of the LLP. It inter-alia states the duties, objects, remuneration and profit share of each partner.
The name change of LLP is possible. For that you need to fill up two forms, namely: Form 1 and Form 5 and then submit it to the ROC.
Startups who wish to invest their own money without seeking any future monetary help from the investors in the business can opt for LLP. Also, Issuance of Employees Stock Options (ESOPs) is not possible in LLP.
Yes, they can. But at least one partner of LLP must need to be an Indian Citizen.
• Limited Liability
• Separate Legal Entity
• Registered with ROC
• Perpetual Succession
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