What is LLP and LLP Registration?
The word Limited Liability Partnership holds immense significance in the corporate world and refers to Limited Liability Partnership which differs from Private Limited Company and General Partnership in terms of liability, protection and cost. This structure for business emerged in 2008 and quickly became widely popular as it not only protects partners from the incompetence and errors made by the other partner but also allows certain flexibility when it comes to changing the internal structure of the management. Furthermore, Limited Liability Partnership is easy to change the allocation of profits and the entire set-up costs less than the incorporation of a private limited company.
Setting up a Limited Liability Partnership is also a clever decision when it comes to taxation; LLP Registration members are required to pay Income Tax, National Insurance and CGT. At least two members are required in the set-up process for the Limited Liability Partnership which attracts firms that don't need equity funding like architects, web designers etc. A LLP Registration also allows easy alteration when it comes to rights, duties and profit allocation of each member, such changes can quickly be implemented and often, no tiresome paperwork is involved. To ease you into the corporate world, going with a LLP Registration is definitely a smart choice!
The LLP registration process is extremely simple and requires only a couple of scanned documents. The first step is to obtain the Digital Signature Certificates of all the partners. Without this DSC, the registration process cannot continue as the DSC will ultimately provide you with a Digital Partner Identification Number (DPIN). This process will take a maximum of six working days. However, it should be noted that the partners are asked to submit a maximum of five documents for this stage which makes the entire process easy and quick when it comes to registering your Limited Liability Partnership company.
The next step takes about 12 working days and refers to the process that occurs after applying for a DSC. A name must be selected for your LLP Registration – make sure the name is unique and captivating! It should also be noted that not only should the name be attractive but also illegal and inoffensive, since it will not be approved if it hurts the sentiments of any group and party. Once the name is selected, it will be filed with the MCA which must give its approval before incorporation. When all is said and done, the MCA will provide you with an approved Certificate of Incorporation.
Finally, the partners must submit hard copies of the documents required in order for an online application to be drawn that allows companies to obtain both Permanent Account Number and Tax Account Number. This process takes about 2 working days and the aforementioned account numbers will be mailed to the office registered in about 21 working days.
Documents Required for LLP Registration
Partners are required to submit scanned copies of the following documents for LLP registration process. It should also be noted that one of the partners must attest the scanned copies of the first three, by himself. For foreign nationals or NRIS, all the documents must either be notarized (applicable for India or non-Commonwealth countries) or should be apostilled, if belonging to a non-Commonwealth region.
- A copy of PAN Card or Passport to be scanned and submitted.
- A scanned copy of your bank statement (latest) or your mobile/telephone bill or gas or electricity bill to be submitted.
- Passport-sized photograph (scanned).
- A blank document with the specimen signatures of all partners.
To register your office you need to submit four important documents; It should also be noted that the registered space need not be commercial; it can even be the residence of one of the partners. Make sure to attach scanned copies of the following four documents.
- Copy of bank statement (latest), mobile/telephone or electricity/gas bill (scanned).
- Copy of rental agreement, scanned, notarized and should be in English.
- Attach a scanned copy of the no-objection certification given to you by the property owner.
- Attach a scanned copy of sale deed/ property deed if property is owned; should be in English.
Advantages of LLP Registration
- Liability is limited – partners would not need to sell their personal assets in order to save the company from debt or financial crisis, only the invested amount is lost and personal property remains safe. This is different from a General Partnership where the partners are supposed to clear the debt even if it means selling personal possessions, liability in a Limited Liability Partnership is limited.
- Taxation advantages – For Limited Liability Partnership, the loans given to partners cannot be taxable as income and the Dividend Distribution Tax or tax surcharge cannot be applied.
- Compliance is reduced.
Frequently Asked Questions
Any individual can become a partner. Another company or even an LLP is eligible to be partner.
Yes! If you're a start-up company and are looking to spend a small amount of money in your early days, an LLP is the right choice for you. Audits only apply to an LLP after the turnover is deemed sizeable.
Any agreement made between the prospective partners and an LLP which addresses the relationship to be fixed between the partners. It contains policies regarding internal management, new partners and other strategies.
An LLP can be set up even with just two partners.
Anyone looking to invest their money can become the investor/partner for an LLP as per specified in the LLP agreement.
Venture capitalists will only make investments in private or public limited companies; therefore, any startups that do not require such capital funding will register for an LLP.
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