Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008 as a way to provide a type of business entity that is simple to maintain while providing limited liability to the owners. LLP is one of the easiest forms of business to incorporate and manage in India. 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 equity funds during its lifecycle.
The main advantages of a LLP over a traditional partnership firm are that in a LLP, one partner is not responsible or liable for another partner’s misconduct or negligence besides limited liability protection for the owners from the debts of the LLP. All partners in a LLP enjoy a form of limited liability protection for each individual’s protection within the partnership like shareholders of a private limited company. At the same time unlike private limited company shareholders the partners of a LLP have the right to manage the business directly.
HOW WE CAN HELP YOU TO START
- We will help you get your Digital Signature (DSC) and Designated Partner identification Number (DPIN)
- We will then help you pick a unique name using RUN (Reserve Unique Name) with MCA (Ministry of Company Affairs)
- We will help you draft the LLP Agreement
- We will complete the SPICe form (Simplified Proforma for Incorporating Company Electronically)
- We will send in a request to the NSDL for company PAN & TAN
Identity Proof of partners
- Self-attested scanned copy of PAN Card of partners
- Notarised passport copy for foreign nationals
Address Proof of partners
- Passport / Driving license /Aadhaar card
- Electricity bill / Bank statement (less than 2 months old)
Registered Office Address Proof:
- Rental Agreement OR sale/registration deed (if owned)
- Copy of recent utility bill (electricity/water) or property tax receipt
- No objection certificate from landlord for use of property as registered office (for rented offices)
- Signed Digital Signature Application (hard copy)
- Other incorporation digitally signed and uploaded as soft copies
WHAT YOU HAVE NOW
- DPIN for all the partners
- Digital signature token for all designated partners
- MoA & AoA (Memorandum of Association & Articles of Association)
- Incorporation Certificate from MCA with CIN
- LLP PAN card
- LLP TAN number
- All supporting documents for opening bank account
SUPPORTING YOUR ON-GOING BUSINESS
- We can maintain your accounts and give you periodic progress reports at end of every month
- We can file your TDS & GST returns
- We can compile and file your income-tax returns
FEATURES OF LIMITED LIABILITY PARTNERSHIP (LLP)
Separate Legal Entity
A LLP is a legal entity and a juristic person established under the Act. Therefore, a LLP has wide legal capacity and can own property and also incur debts. However, the Partners of a LLP have no liability to the creditors of a LLP for the debts of the LLP. The partners are distinct from the entity and both can sue each other and get sued in the process.
A LLP has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A LLP being a separate legal person, is unaffected by the death or other departure of any Partner. Hence, a LLP continues to be in existence irrespective of the changes in ownership. Once a Limited Liability Partnership is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the LLP will become a Dormant and maybe struck off from the register after a period of time
The ownership of a LLP can be easily transferred to another person by inducting them as a Partner of the LLP. LLP is a separate legal entity separate from its Partners, so by changing the Partners, the ownership of the LLP can be changed. All you need is to induct them as a Designated Partner of the LLP. LLP is a separate legal entity separate from its Managing Partners, so by changing the Managing Partners, the ownership of the LLP can be changed.
A LLP being an artificial judicial person, can acquire, own, enjoy and sell, property in its name. No Partner can make any claim upon the property of the LLP – so long as the LLP is a going concern.
Audit & Regulatory
LLPs are required to file an annual filing with the Registrar each year. However LLPs with a turnover of less than 40 Lakhs and capital contribution of less than 25 Lakh need not get their accounts audited .Therefore, LLPs are ideal for start-ups and small businesses that are just starting their operations and want to have minimal regulatory compliance related formalities.
Digital Signature (DSC):
What is a Digital Signature Certificate (DSC)? The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance program are required to be filed with the use of Digital Signatures by the person authorized to sign the documents.
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Designated Partners sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all partners of a proposed LLP.
Class of DSC
The Ministry of Corporate Affairs has stipulated a Class-II or above category signing certificate for e-filings under MCA21. A person who already has the specified DSC for any other application can use the same for filings under MCA21 and is not required to obtain a fresh DSC.
Required documents for getting DSC:
- Specified Form filled as per given guidelines
- ID proof of the applicant (Copy of the PAN card should be attested by the Gazetted officer/Bank manager/Post master).
- Address proof (Passport/Aadhaar card/Driving License/Voter Id/Latest Utility Bill like Electricity bill, Telephone bill, Water bill, Gas bill, etc, Property Tax receipt). This needs to be attested by a Gazetted officer/ Bank manager/ Post master.
- Passport size photo(3.5 cm X 2.5 cm)
Designated Partner Identification Number (DPIN):
The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending directors have to obtain DIN within the prescribed time-frame as notified. DIN is a unique identification number allotted to an individual who is an existing director of the company or intends to be appointed as director of a company. DIN is an 8 digit number
It is a unique identification number assigned to all existing and proposed Designated Partner of a LLP. It is mandatory for all present or proposed Designated Partner to have a Designated Partner Identification Number. Designated Partner Identification Number never expires and a person can have only one Designated Partner Identification Number.
DIN or Director Identification Number and DPIN can be used interchangeably. If a person holds both DIN and DPIN, then the DPIN will stand cancelled and the DIN must be used for appointing the person as a Designated Partner of a LLP.
- To incorporate a Limited Liability Partnership, a minimum of two people are required.
- There is no limit on maximum of any number of Partners.
- The Designated Partners needs to be over 18 years of age and must be a natural person.
- There are no limitations in terms of citizenship or residency. Therefore, the LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate a LLP in India provided at least one designated partner is resident of India.
You can start a Limited Liability Partnership with any amount of capital. There is no requirement to show proof of capital invested during the incorporation process. Partner’s contribution may consist of both tangible and/or intangible property and any other benefit to the LLP.
Foreign Direct Investment (FDI) is allowed in LLP under the automatic route in sectors allowed by the Foreign Investments Promotion Board (FIPB). However, Foreign Institutional Investors (Flls) and Foreign Venture Capital Investors (FVCIs) will not be permitted to invest in LLPs. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs).
Conversion from partnership to LLP:
An existing partnership firm or a company that is unlisted can be converted into LLP. There are many advantages of converting a partnership firm into a LLP; however, the same doesn’t apply for the conversion of a Company to a LLP.
One of the essential requirements for setting LLP is ‘carrying on a lawful business with a view to profit’. Therefore, LLP cannot be incorporated for undertaking “Not-For-Profit” activities.