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How To Register An LLP?
If you’re considering launching a business in India alongside a partner, opting for an LLP company might be the ideal choice. LLPs offer the advantages of partnership flexibility combined with the protection of limited liability, making them a preferred option for small and medium-sized enterprises aiming to protect their partners’ personal assets while maintaining straightforward management. Our comprehensive guide will lead you through the LLP registration process in India, covering each step meticulously. From selecting a distinctive name to completing essential documentation, we’ll equip you with all the information you need to embark on your business journey confidently.
An LLP, short for Limited Liability Partnership, merges the benefits of a partnership with those of a limited liability corporation. While the LLP itself is subject to taxation on its earnings, partners are not individually taxed on their share of profits distributed.
Moreover, LLPs entail fewer legal and procedural obligations. Within an LLP, each partner is not held responsible or liable for the misdeeds or negligence of another partner.
Partners bear no personal liability for any debts or obligations arising from financial or legal issues within the business, provided proper management and compliance are maintained.
LLPs operate under an operating agreement, a contract among members outlining the business’s operations and the distribution of costs and profits.
The primary motivation for establishing an LLP at the inception of a new business is to maintain a clear separation between personal and business matters.
An increasing number of non-resident Indians (NRIs) are opting to participate as partners in LLPs to navigate around limitations on fund repatriation.
Dividends and rent from current accounts can be transferred abroad without restrictions, while proceeds from capital transactions like stock and real estate sales are limited to $1 million annually. Partnerships within LLPs were beneficial for NRIs as their profit shares were categorized as current income, allowing for repatriation irrespective of fund amounts.
Features of LLP Company
- It possesses a distinct legal identity.
- It can possess both tangible and intangible assets, and also assume debts.
- LLP persists irrespective of changes in ownership.
- Each partner’s liability is restricted to their contribution.
- Formation expenses for LLP are minimal.
- Compliance procedures are straightforward.
- No obligatory minimum capital investment.
- The business is titled as (business name LLP).
A Limited Liability Partnership Company Is Registered In 5 Easy Steps.
- Obtain digital signature of partners
- Obtain DPIN of partners
- LLP name approval
- Incorporation certificate
- Registration of LLP agreement
What Are The Requirements For Limited Liability Partnership Company Registration?
- Unique name: To register an LLP, you need a distinct name for the proposed company, which you can verify using our online LLP name search tools.
- Designated partners: An LLP requires a minimum of 2 natural persons as designated partners, aged above 18, with no maximum limit on partners.
- Partner: At least 2 partners are necessary, who can be natural persons or entities. It’s common for partners to also be shareholders in new LLP registrations, with the distribution of shareholding/profit sharing needing specification.
- Company objects: Defining the nature and scope of business activities is essential for starting a limited company.
- Main objects: Similarly, for LLP registration, outlining the business nature and activities range is crucial.
- Registered office: Indian law mandates an official address for LLPs to receive all company communications, publicly available on the MCA website. Offices can be rented or owned, commercial or residential, including the option to use a residential address.
- Documents: LLP registration is done online, allowing you to scan/photograph attested documents of partners, shareholders, and registered office address proof from your mobile phone, which we’ll then organize and promptly file without delays.
Why Choose To Register A Limited Liability Partnership Company?
- Renowned form of business: LLPs have gained recognition globally, particularly in the service sector, although their popularity is relatively recent in India.
- Easy formation: LLP incorporation is straightforward and cost-effective, requiring minimal formality.
- Body corporate: LLPs function as separate legal entities from their partners, identified by unique names rather than individual partners’ names.
- Liability: LLPs offer partners protection from personal liability for debts and lawsuits incurred by the business, enhancing security, especially for businesses prone to legal risks.
- Perpetual succession: LLPs have perpetual succession, ensuring continuity despite changes in partners.
- Flexibility: LLPs afford partners considerable freedom in managing their affairs, governed by the LLP agreement rather than stringent regulations.
- Easy transferable ownership: Ownership changes within an LLP are facilitated per the terms of the LLP agreement, simplifying partner transitions.
- Separate property: LLPs own assets independently, distinct from those of individual partners, shielding partners from disputes over company property.
- Taxation: While LLPs are taxed at the corporate rate, they are exempt from dividend distribution tax, benefiting partners during profit distribution.
- Raising funds: LLPs, akin to companies, can attract financing from investors, venture funds, and financial institutions, providing easier access to capital.
- Capacity to sue: LLPs can litigate and be litigated against in their name, with partners shielded from personal liability for LLP dues.
- No audit requirement: LLPs with modest turnovers or contributions are exempt from mandatory audits, easing the compliance burden for small businesses.
- Partners are not agents of partnership: Unlike traditional partnerships, LLP partners are not liable for the actions of other partners, safeguarding individual interests.
- Compliances: LLPs have minimal regulatory requirements compared to private companies, reducing compliance obligations.
Documents Required For Limited Liability Partnership Registration
Partner Documents For Llp Registration:
- Photograph of partners in passport size.
- Pan card copy of partners.
- Passport / voter ID card / driver’s license of partners.
Documents Required For The Registered Office:
- Recent utility bill (electricity, mobile, or telephone) for the business premises.
- Lease agreement copy (if the property is rented).
- Property ownership documents (if the property is owned).
- No Objection Certificate (NOC) from the landlord (template will be provided).
If Partners And Designated Partners Are Different, Then The Following Documents From Partners Are Required:
In The Case Of An Individual Partner:
- Copy of PAN card.
- Copy of Aadhaar card, passport, driving license, or voter identity card of shareholders.
- Photograph.
In The Case Of A Corporate Body:
- Certificate of registration.
- All documents must be self-attested and provided in digital format.
FAQs - LLP Registration
A Limited Liability Company is a business structure that combines the limited liability protection of a corporation with the flexible management and taxation of a partnership or sole proprietorship.
To register a Limited Liability Company, you typically need to file Articles of Organization with the state’s Secretary of State office and pay the required filing fee.
Some benefits of forming a Limited Liability Company include limited personal liability protection, flexible management structure, pass-through taxation, and ease of formation and maintenance.
While it is not required to have an attorney, consulting with one can be beneficial to ensure compliance with state laws and regulations, especially if your Limited Liability Company has complex ownership or management structures.
Ongoing requirements may include filing annual reports, paying state fees, maintaining accurate records, holding annual meetings (if required), and complying with state regulations regarding taxes and reporting.
Yes, a Limited Liability Company can have one or more owners, known as members. The ownership structure can be customized to fit the needs of the business.
Naming requirements vary by state, but generally, the Limited Liability Company name must be unique and not already in use by another business entity in the state. Additionally, the name usually needs to include “Limited Liability Company” or a similar designation to indicate its limited liability status.
By default, a Limited Liability Company is taxed as a pass-through entity, meaning that profits and losses are reported on the owners’ personal tax returns. However, Limited Liability Companies have the option to elect corporate taxation if it better suits their financial needs.
Yes, non-residents can form a Limited Liability Company in the United States, but they may need to designate a registered agent with a physical address in the state of formation and comply with any additional state requirements for non-resident business owners.
While both Limited Liability Companies and corporations offer limited liability protection, they differ in terms of management structure, taxation, and regulatory requirements. Limited Liability Companies typically have a more flexible management structure and pass-through taxation, while corporations have stricter management requirements and can choose between different tax classifications, such as C corporation or S corporation status.