Limited Liability Partnership Registration

What is a Limited Liability Partnership?

A limited Liability Partnership is a form of business entity that combines the benefits of a corporate and traditional business structure. So, it is often called a hybrid between a partnership and a company. It amalgamates the benefits of both limited liabilities of a company as well as that of a partnership. The LLP can continue to remain in existence even if the partners are changed. It can enter into contracts and can also hold property in its name. In this, the liability of the partners is limited to their pre-agreed contribution. It reduces the liabilities for the actions of other partners, so individual partners are protected from another partner’s misconduct or wrongful decision.

The concept of LLP is governed by the Limited Liability Partnership Act of 2008 and LLP Rules,2009.

Starting a business can be an overwhelming experience with many factors to consider. Deciding the right form of business entity is of utmost importance while starting up. Here, we will unveil why you should opt for a Limited Liability Partnership:

why you should opt for a Limited Liability Partnership:

• No requirement of minimum capital contribution:LLP can be formed without any minimum contribution of capital, unlike Pvt. Ltd. Company which requires a minimum authorized capital of amount 1 lakh. The contribution of capital in the case of LLP can be done in installments which makes this vehicle ideal for small business entities. There is no restriction provided under the LLP Act regarding minimum contribution at the time of incorporation.
• Separate legal entity:LLP is a separate legal entity from its partners. It can enter into contracts and can also hold property in its own name.LLP is capable of suing and being sued by other parties. Because of its status, the partner’s entry or exit won’t affect the LLP.
• Limited Liability: The liability of the partners is limited to the share of their contribution. This protects the partners from personal liabilities or bankruptcy (except in cases of fraud done by any partner).
• Lesser compliance:The compliances to be followed under LLP are less as compared to a Pvt. Ltd. Company. All LLPs are required to get their accounts audited by a CA. However, an audit of accounts is not mandatory until a turnover in the financial year exceeds Rs. 40 lakhs or the capital contribution exceeds Rs. 25 lakhs..
• Tax Benefits::Profits will be taxed on the LLP distinctively and not on the partners, which avoids the issue of double taxation..
• Perpetual Succession: It is the ability of LLP to continue with its business operations irrespective of the change in any of its partners. It can also hold property in its own name because it is a separate legal entity from its partners. Winding up of an LLP can be done voluntarily or by an order of the tribunal
• Higher credibility:The accessibility of LLP documents for the general public is allowed by the registrar except for the LLP agreement. This helps the people to judge its credibility. Due to this transparency, the credibility of LLP is higher as compared to other business entities. This makes fundraising from banks and other financial institutions easy for LLP.
• No limit on the upper limit of partners: LLP should have at least 2 members as designated partners. But there is no limit on the maximum number of partners that it can have. This increases the chances of getting the maximum number of investors. .

What are the requirements for form LLP?

Limited Liability Partnership	Requirements
Partners needed	Minimum 2 partners are required to register a LLP. However, there is no limit on the maximum number of partners.
Minimum capital	There is no requirement for minimum capital contribution.
Resident person	At least one designated partner of LLP should be an Indian resident
Name of LLP	The name of LLP should be unique and should end with LLP.

Documents required for LLP

For Indian Nationals:

For Designated Directors Identity proof: PAN card as the primary identity proof of the partners Address Proof: Voter ID card/Aadhar card/ Driving Licence /Passport/ Residence Proof: Most recent bank statement/ Telephone Bill/ Gas/ Water/Electricity Bill/ Appropriate lease agreement Copy of passport-sized photograph of all partners For Registered office premises: Utility Bill of the proposed registered office No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property)

For Foreign Nationals and NRI:

For Designated Directors Passport: Notarized passport along with proof of date of birth of the designated partner. Address Proof: Driving Licence / Residence card/ Bank statement / Government issued address proof. These documents must not be older than 1 year. If it is in a foreign language then it must be translated by an official translator and should be notarized or apostilled. Residential proof: Bank statement/ Telephone Bill/ Electricity Bill For Registered office premises: Registered office proof: NOC from the landlord Utility Bill of the proposed registered office

Steps in formation of LLP:

Online Limited Liability Partnership registration made easy by Filing Karo. Registration of a company may look tedious to those entering afresh into the venture. Filing Karo, a prominent player in this field is there to help you at every stage of LLP registration. The entire package of LLP registration can be availed at just Rs. 6,990. The package covers;

• Obtaining DSC (Digital Signature Certificate) and DIN for up to 2 Directors
• Reserving the name of LLP: Choosing a unique name for your firm holds a special significance in LLP registration. There are factors to consider such as the name should not be already taken and it should be checked for its availability and uniqueness. Once DSC and DIN are there, Filing Karo professionals will check for the availability of the 2 proposed names for the firm and will file for name approval in the MCA (Ministry Of Corporate Affairs)
• File FiLLiP form (Form For Incorporation Of Limited Liability Partnership) with the ROC.
• Filing Karo experts will draft LLP Deed in consultation with you and your suggestions will be incorporated.
• Once Partnership Deed is there, Experts at Filing Karo will fill out the form SPICe for the LLP Formation.
• Filing Karo also helps fulfill other legal requirements like stamp duty and registration fees.
• ROC issues PAN and TAN
• To manage the transactions, every company needs a bank account in its name. Filing Karo helps you open a current bank account in your company’s name
• You can start operating your firm.

Procedure for Income Tax Return Filing of LLP

LLPs needs to file their return in Form ITR 5. This form can be filed online with the help of the DSC ( Digital Signature Certificate ) of the designated partners on the Income Tax website. The procedure to file Income Tax Return is completely Online. This involves the following stages:

• Registration of LLP on Income Tax website
• Prepare Balance Sheet of LLP
• Prepare statement of Profit and Loss
• Prepare LLP Income Tax Computation sheet
• Pay online the LLP Income Tax
• Download Form 5 of Income Tax Return
• Fill Financial information of LLP
• Upload ITR with partner’s DSC
• e-Verify the Income Tax Return

What is Form 8 in LLP Annual return filing?

It is mandatory to file form 8 in the case of LLP. Form 8 is a statement of Accounts and solvency. It shows the financial transaction undertaken during the financial year along with the financial position of the company. All LLPs are required to prepare and close their accounts by 31st March of every year. Form 8 needs to be filed by at least 2 designated partners with the ROC within 30 days of completion of 6 months of the financial year i.e., 30th October every year.

What is Form 11 in LLP Annual return filing?

Form 11 is a statement of the Annual return of LLP. The return should be filed every year to maintain compliance with the Ministry Of Corporate Affairs. Filing of Form 11 is mandatory for all the LLPs.It contains details of the LLP. Even in case of no activity, this form needs to be filed. This is an e-form that is to be filed on MCA Portal. All the LLPs are required to fill this form within 60 days of closure of the financial year, failing which will lead to a penalty fee. Based on your capital a fee for this form will be decided.

Why LLP is advantageous over Partnership?

Due to ease of maintenance and ease of registration, Partnerships governed under the Partnership Act, of 1932 were very popular. But with the introduction of the concept of Limited Liability Partnership under the Limited Liability Partnership Act, 2008 the eminence of partnership has been overtaken by LLP, which offers many tax benefits and has advantages of more credibility & lesser compliance. Here, we will list down the basic points of difference between LLP and Partnership firm.

Basis of comparison	Limited Liability Partnership	Partnership
Entity type	LLP is a separate legal entity from its partners and it can hold property in its name & can also enter into contracts	Partnership form does not hold a separate legal status from its partners.
Governing Law	Limited Liability Act, 2008	Indian Partnerships Act, 1932
Registration	Registration of LLP under LLP Act is mandatory	Registration of the Partnership Firm under the Indian Partnership Act, 1932 is voluntary
Liability of the Partners	Liability of partners in LLP is limited to the share of their contribution. One partner is not liable for the actions of another partner.	The liability of the partner is not limited and the shareholders risk losing their personal assets. The action of one partner can hold another liable.
The number of partners	Minimum 2 designated partners are required to incorporate LLP. However, there is no limit on the maximum number of partners that a LLP can have.	The maximum no. of partners that a partnership firm can have is 50.
Registration	Registration of LLP is compulsory and it is registered with ROC on MCA’s portal.	Registration is not mandatory for partnership Firms. If registered, registration shall be done with the local Registrar of firms.
Compliance and Taxation	Tax on LLP profit is 30%+ educational cess. It is compulsory for LLP to file ITR with MCA.	Tax on Profit of a Partnership firm is 30% + educational cess. There is no annual return filing requirement for a partnership firm.
Credibility	MCA allows the availability of documents for the general public except for agreements between partners. This transparency creates higher credibility and fundraising becomes easy for LLPs.	Any data or information of the Partnership firm is not disclosed on the public platform.
Naming aspect	Name of a Limited Liability Partnership must end with ‘LLP’.	A partnership firm can be started with any name of choice.
Creation	LLP is created by law	A Partnership is created by contract

Conditions to be fulfilled for conversion of a partnership firm to LLP

There are various types of GST registration such as

• The Conversion of a partnership firm to LLP is done as per Section 55 of the LLP Act, 2008 read with schedule 2 of the Act.
• All the partners of the firm shall become partners of the LLP this means existing partners shall continue to remain partners and no new partners will be acceptable while making the application.
• All the partners must have a valid DSC(Digital Signature Certificate) and at least 2 partners must have DIN(Director Identification Number) before making such an application.
• The partnership firm to be converted should be registered under Partnership Act, 1932
• All the partners need to grant consent for conversion
• NOC or any prior approval if required shall be obtained from the requisite department.

Procedure for conversion of Partnership firm into LLP:

• 1

  Obtain DSC of designated partners:

  For registration of a partnership firm, a DSC is not required so the partners do not have one. But, for conversion of a partnership firm to LLP as a necessary step, it is mandatory for all the partners to obtain a Digital Signature certificate.

• 2

  Obtain DIN/ DPIN for converting partnership firm to LLP

  Take 1 working Day

  For conversion of partnership firm to LLP, all the directors are required to obtain a DPIN/ DIN(Director Identification Number) which is a unique number and will be valid for life.

• 3

  Apply for Name Approval of LLP

  • Log in to the MCA Portal
  • Under the services tab, select ‘RUN-LLP’, where RUN stands for ‘Reserve Unique Name’.
  • From the dropdown, select ‘Conversion of Firm into LLP’
  • Then provide 2 alternate names for the LLP
  • Then supporting documents needed must be uploaded in the pdf format.
  • Click the ‘Submit’ button.
  • The page will redirect to the payment gateway where the fees for the form shall be paid.
  • The approved name holds validity for a period of 90 days from approval.

• 4

  File FiLLiP(Form For Incorporation Of LLP).

  This form shall be filed with details like

  • RUN-LLP, here the details provided earlier will be auto-filed
  • Enter the registered office address and proposed e-mail id of the LLP
  • Nature of business activities to be carried out by the LLP
  • Details of the designated partners and their respective DIN/DPIN/PAN
  • Contribution amount by the Partners of LLP

• 5

  Filing of Form 17(Application for converting Partnership Firm into LLP)

  This form for conversion shall be filed by all the partners of the firm with information like

  • the Name of the proposed LLP
  • Service Request Number (SRN) of the RUN-LLP
  • Name, address, registration and partnership details of the firm
  • Details regarding capital contribution and the number of partners
  • Details of creditors
  • Consent of conversion by all partners
  • Copy of acknowledgment of latest income tax return
  • Existing partnership deed
  • Registration certificate of partnership firm issued by ROC, if any.

• 6

  Filing of Form 3 ( Information mentioned in LLP Agreement shall be filed here)

  Within 30 days of incorporation of LLP, details of LLP Agreement must be filed in Form 3 which includes the following information:

  • Name of LLP
  • Names of designated and non-designated partners
  • Capital contribution by partners and profit sharing ratio
  • Rights and duties of the partners
  • Any other information related with the LLP

• 7

  Allocation of Certificate of Incorporation:

  On approval of the conversion application, a certificate of Incorporation will be issued by the Registrar. This would result in the transfer of all the assets, liabilities, and interests of the partnership firm to LLP. If the application for conversion gets rejected by the Registrar then the firm can file an appeal before the Tribunal.

• 8

  Intimate Registrar of Firms:

  The LLP shall intimidate the within 15 days about the conversion status to the Registrar of Firms in Form 14 along with;

  • Copy of Certificate of Incorporation
  • Copy of Incorporation documents submitted in form FiLLiP
  • This must be noted that Form 14 is a physical form which must be duly filed and submitted to the Registrar of Firms.
  With the compliance of all the above-mentioned procedures, it can be termed that the process of conversion of Partnership firm to LLP is complete.

Document required

Type of Entity	Documents Required
Sole Proprietor	PAN Card of applicant/owner ID Proof: PAN card of applicant/owner Address Proof: Ration card/ Aadhar Card/ Driving License/Voter ID of applicant/owner 2 Passport-sized photographs of applicant/owner Address proof of the place of business- any utility bill such as water/electricity/telephone/gas bill No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property) A bank account statement that includes name, address, and a few transactions
Partnership and LLP	PAN Card of firm ID Proof: PAN card of Partners Address Proof: Ration card/ Aadhar Card/ Driving License/Voter ID 2 Passport-sized photographs of Partners Address proof of the place of business- any utility bill such as water/electricity/telephone/gas bill No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property) A bank account statement that includes name, address, and a few transactions Digital signature for authorized signatory
Private Limited Company and Public Limited Company	A Certificate of Incorporation serves as a confirmation of a company's formation. Pan card of Company ID Proof: PAN card Address Proof: Ration card/ Aadhar Card/ Driving License/Voter ID 2 Passport-sized photographs of Directors Address proof of the place of business- any utility bill such as water/electricity/telephone/gas bill No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property) A bank account statement that includes name, address, and a few transactions Digital signature for authorized signatory