A Limited Liability Partnership (LLP) is such a business entity which combines both the features of Partnership and the corporate business model. An LLP is govern by its own act the Limited Liability Partnership Act, 2008 and the LLP Rules, 2009 as amended from time to time. LLP requires minimum 2 Partners run the business of LLP. Limited Liability feature of this Partnership Form saves partners personal properties from being dragged into liquidation and puts limit on the individual responsibility and liability.
LIMITED LIABILITY PARTNERSHIP REGISTRATION (LLP)
Limited Liability Partnership (LLP) was introduced in India in 2008. The rationale of this business model is to provide simplified business entity that is simple to regulate while providing limited liability to its partners.
With an easy incorporation process and simple compliance formalities, LLP is preferred by Professionals, Micro and Small businesses that are family owned or closely-held. Since, LLPs are not capable of issuing equity shares, LLP should be used for any business that has plans for raising funds during its lifecycle other than the mode of equity shares.
The main advantage of LLP over a traditional form of partnership firm is that, one partner is not liable for another partner’s misconduct or negligence. An LLP also protects partners from the debts of the LLP through putting a limits on their liability towards LLP. Therefore, all partners in LLP are privileged with limited liability within the partnership similar to that of shareholders of a Limited Liability Partnership. In LLP, the Designated Partners have the right to manage the business directly just like a shareholders of Limited Liability Partnership.
LEGALRAJ will assist you in the process of LLP registration. The average time taken to complete a LLP registration is about 5-10 working days, subject to government processing time and client document submission. Get a free consultation on LLP registration and business setup in India by scheduling an appointment with an LEGALRAJ Advisor online.
What is the Limited Liability Partnership (LLP) ?
A Limited Liability Partnership (LLP) is such a business entity which combines both the features of Partnership and the corporate business model. An LLP is govern by its own act the Limited Liability Partnership Act, 2008 and the LLP Rules, 2009 as amended from time to time. LLP requires minimum 2 Partners run the business of LLP. Limited Liability feature of this Partnership Form saves partners personal properties from being dragged into liquidation and puts limit on the individual responsibility and liability. The LLP model of business is mainly administered by an agreement known as an “LLP Agreement” which defines duties, roles and responsibility of all partners of the LLP which effectively and efficiently avoids unwanted dispute or and unnecessary conflict of interest.
What will you receive in LLP registration package ?
Advantages of Limited Liability Partnership Registration:
1. Separate Legal Entity:
Limited Liability Partnership is a legal entity and a juristic person established under the Limited Liability Partnership Act, 2008. Hence, an LLP has a wide range of legal capacities and the Partners including Designated Partners (DPs) of an LLP have no personal liability to the creditors for LLP's debts.
2. Perpetual succession gives longest business life:
Limited Liability Partnership has 'perpetual succession', which means uninterrupted existence until it is legally dissolved. An LLP being a separate legal person, is unaffected by death or other departure or cessation of any partner and it continues to be in existence irrespective of changes in ownership.
3. Easy availability of Borrowing:
Limited Liability Partnership can easily raise borrowed funds as per the requirements of business. LLP can also accept funds from its partners without any limits. Banks and Financial Institutions prefer to provide funding to LLP rather than partnership firms or proprietary concerns.
4. Owning Property:
Limited Liability Partnership being an artificial person, can acquire, own, and alienate, property in its own name. The property owned by LLP could be machinery, building, intangible assets, land, residential property, factory, etc., No partner can make a claim upon the property of LLP - as long as the LLP is a going concern.
5. Growth & Expansion:
One of the advantage of Limited Liability Partnership is that it contains plenty of professional partners in its management because of which professional expertise and experience is infused in the business administration and management which ultimately leads to expansion and growth of business.
6. Small business can take benefit of MSME status:
A Limited Liability Partnership starts is also eligible to be recognised as micro, small or medium industrial unit. The initial profitability and security of its own trade interests and business is very difficult to manage. Hence, LLPs can also obtain Undyog Aadhaar for being considered itself as a Small Scale Industrial unit and get concessions on statutory Govt. expenses in the course of its business and also can avail numerous Govt. grants and subsidies.
7. Start up registration for Income Tax benefits:
If your business is uniquely identified and has potential for generating the large scale employment opportunities, then you can register your Limited Liability Partnership under Govt.’s Start-Up India Scheme and take huge Income Tax Benefits for at least 5 years.
What are the minimum requirements for Registering a Company in India?
Minimum 2 Designated Partners *
There is no minimum capital requirements
DSC of the promoter - shareholders of proposed Company
DIN of the proposed Directors
Unique Name for the proposed Company
Registered office Address of the Company
* (The Designated Partners and Partners are generally the same persons.)
Step 3: Prepare and filing of Form Spice Form FiLLiP for incorporation
Step 4: Obtain the Certificate of Registration
Step 5: File LLP Agreement in Form 3
The entire process for registration of Company will take at least 5 to 10 working days from the receipt of all the necessary documents and filing with the ROC.
What Documents are required for Company Incorporation ?
Copy of PAN Card of all Partners
Passport size photograph of Partners
Copy of Aadhaar Card/ Voter identity card/ Passport/ voting ID card of Partners
Copy of Rent agreement (If rented property)
Electricity/ Gas bill/ Water Bill/ Electricity Bill/ Bank Statement for Office of Company
Copy of Index II or Property Tax Receipt (If owned property)
Landlord NOC (Format will be provided)
Precautions to be taken while name reservation
1. Meaningful: The name of your LLP should have some meaning even though more than two words combination is used. The name taken by the promoters of the LLP should not be able to be challenged by anyone.
2. Unique: It should not create resemblance with the existing Company or LLP names or even the Trade Marks (either registered or in the process of registration).
3. Activity reflecting: In the name of your proposed LLP, activity or main business object should be reflected or represented.
4. Should not be illegal / offensive: The name of your LLP should not be against law. It should not be abusive or against the customs and beliefs of any religion.
Is there any benefits available to a Limited Liability Partnership under Start-Up India ?
Small Companies, Private limited and One Persons Companies are three types of Companies which forms large part of the total companies in India. All these small scale business units / Companies are the actually the growth indicators of the Country’s Economy such as Concepts like Start Up India, Make in India, Digital India, etc… whichare the most successful recent govt. initiated programmes to strengthen the growth potential of the Indian businesses at micro level.
One of the programme is Start Up India which gives the following enlisted benefits as per the scheme:
1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws.
2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value.
3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016.
4. Startup Patent Application & IPR Protection: Fast track patent application with up to 80% rebate in filling patents.
5. Easier Public Procurement Norms: Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders.
6. SIDBI Fund of Funds: Funds for investment into startups through Alternate Investment Funds.
To take above mentioned benefits it very much necessary to get your Company or LLP or Partnership or Proprietary Firm register under this Start Up Scheme. Following is the Eligibility Criteria for Startup Recognition:
The Startup should be incorporated as a Limited Liability Partnership or registered as a Partnership Firm or a Limited Liability Partnership.
Turnover should be less than INR 100 Crores in any of the previous financial years.
An entity shall be considered as a startup up to 10 years from the date of its incorporation.
The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth.
An entity formed by splitting up or reconstruction of an existing business shall not be considered a "Start-up".