Limited Liability Partnership
Limited Liability Partnership LLP Registration
A Limited Liability Partnership or an LLP is a legal entity which is registered under the Limited Liability Partnership Act, 2008. In traditional Partnership, the liability is unlimited. In contrast, in LLP the liability is limited. It acts as a middle ground between a Company and a Partnership as it gives you the advantages of a Company with the flexibility of a Partnership.
An LLP is registered as per the guidelines of the Ministry of Corporate Affairs aka MCA. Recently, it has become one of the most preferred forms of legal entities in India.
E-Taxwala is India’s leading portal for online LLP Registration. We, at E-Taxwala, can help you get your LLP Registered quickly anywhere in India.
Benefits of online LLP Registration in India
The main benefits for LLP Registration in India are as follows:
- Limited liability of its partners
- Separate legal existence similar to companies
- Low cost of formation in comparison to Pvt. Ltd. Company
- Lesser number of compliance compared to companies
- No formal Audit in necessary if capital contribution is below Rs. 25 lacs and annual turnover is below Rs. 40 lacs.
Detailed LLP Registration process in India
- Arrange the required documents
- Obtain DSC
- LLP Name Approval and Verification
- Filing of Documents for incorporation with ROC
- Drafting and Filing of LLP Agreement
Minimum Requirements for Online LLP Registration in India
- Minimum 2 Partners. There is no limit on maximum number of partners in an LLP
- Minimum 1 Designated Partner must be a Resident of India
- DSC is mandatory for all the Partners
- Office Address Proof of LLP. The registered office need not have a commercial space. Even a rented place can be treated as the registered office (if you have the NOC from the Landlord of the premises).
Factors to consider while picking a name for your LLP
The various factors which you should keep in mind while picking a name for your company are as follows:
- The name should have the words ‘LLP’ at its end
- The name must be distinctive and unique
- The name should be suggestive of the LLP’s business
- The name should follow the guidelines of MCA
LLP v/s Private Limited Company
The Pros of opening an LLP are as follows:
- Cheaper to start
- Fewer Compliances
The Cons are:
- No VC Funding
- No ESOPs
Due to the above cons, start-ups who want funding from VCs prefer Private Limited Company. If you have no such requirements, then you should go for LLP incorporation.
Features of LLP
- It has a separate legal entity just like companies.
- The liability of each partner is limited to the contribution made by the partner.
- The cost of forming an LLP is low.
- Less compliance and regulations.
- No requirement of minimum capital contribution.
The minimum number of partners to incorporate an LLP is 2. There is no upper limit on the maximum number of partners of LLP. Among the partners, there should be a minimum of two designated partners who shall be individuals, and at least one of them should be resident in India.The rights and duties of designated partners are governed by the LLP agreement. They are directly responsible for the compliance of all the provisions of the LLP Act 2008 and provisions specified in the LLP agreement.
LLP Registration Process
Checklist for LLP Registration
- Minimum of two partners.
- DSC for all designated partners.
- DPIN for all designated partners.
- Name of the LLP, which is not similar to any existing LLP or trademark.
- Capital contribution by the partners of the LLP.
- LLP Agreement between the partners.
- Proof of registered office of the LLP.
Frequently Asked Questions
Is LLP registration mandatory?
Yes, an registration of an LLP on the Ministry of Corporate (MCA) portal is mandatory. An LLP must obtain registration under the Limited Liability Partnership (LLP) Act to be a legally valid entity.
What is the difference between LLP and a Partnership Firm?
An LLP must be registered under the LLP Act to operate its business. However, the registration of a partnership firm is voluntary under the Partnership Act, 1932. The liability of each partner is limited to the contribution made by the partner in an LLP. But in a partnership firm, all partners are personally liable for the loss/debts of the firm.
The LLP has a separate legal entity, i.e. it can buy property, sue and be sued in its name. Partnership firms cannot buy a property or sue anyone in the partnership firm’s name. It has to be in the name of the authorised partner as the partnership firm does not have a separate legal entity.
Does LLP require MoA and AoA?
No, the Memorandum of Association (MOA) and the Articles of Association (AOA) are important documents of a company registered under the Companies Act, 2013. The LLP agreement governs the LLP and not the MOA and AOA. Thus, an LLP does not have to draft the MOA and AOA. It has to draft the LLP agreement.
Should directors be appointed to an LLP?
No, there are no directors in an LLP. An LLP does not have to appoint directors or have a board of directors. The partners govern the business of an LLP. The partners take decisions regarding the working and business of the LLP. Thus, an LLP needs to have a minimum of two partners at all times.
What is DPIN?
Designated Partner Identification Number (DPIN) is a unique number given by the MCA to the designated partner of an LLP. The DPIN is similar to the Director Identification Number (DIN) of a company director. DPIN can be obtained for any person when registering an LLP, or a person can later apply for a DPIN to become a designated partner of an existing LLP.
What is the eligibility to be appointed as a designated partner in an LLP?
Any individual partner can become a designated partner in an LLP by consenting to it and in accordance with the LLP agreement. A body corporate cannot be a designated partner. All partners can be designated partners in an LLP if such a provision is provided in the LLP agreement.
Who can be partners in an LLP?
Any individual or body corporate can be a partner in an LLP. However, minors, persons of unsound mind and an undischarged insolvent cannot be partners in an LLP.
How many designated partners are required in an LLP?
Every LLP must have at least two designated partners, and at least one of them should be a resident in India. If all partners in an LLP are body corporates, then at least two individual nominees of such body corporates should act as designated partners. Any partner can be a designated partner in accordance with the LLP agreement.