Limited Liability Partnership entities, has been introduced in India by way of Limited Liability Partnership Act, 2008. In LLP, one of the most important benefits is that all partners are not responsible for the misconduct or negligence of another partner. In Limited Liability Partnership, the liabilities of the partners are limited up to their contribution to LLP; personal properties are not attached to settle creditors.
Formation of Limited Liability Partnership is very easy process and less formalities as compared to incorporation of company. The process of formation is very simple and cost of incorporation is also minimum. Also it is easy to transfer ownership of LLP as compared to other entities.
The main benefit in formation of Limited Liability Partnership LLP is less compliance as compared to Private limited Company. Therefore it is suitable for small businesses as it will lower their overall compliance cost.
One of the main advantage of LLP is benefit in taxation, the tax rate is lower as compared to company. In company tax is charged on total profit whereas in LLP tax is charged on profit after distribution of profit to partners. As LLP does not have Share capital, hence there is no tax on dividend distribution.
At least two partners are required for LLP registration. The maximum partners can be 200.
In Incorporation of LLP the First Step is to acquire Digital Signature Certificate (DSC) and Designated Partner Identification Number (DPIN) for the proposed Partners of the LLP. DPIN and DSC can be obtained within 5 to 6 days.
Once DPIN and DSC is obtained then we can file form for name approval. In name approval we have to mention at least One name and maximum Six name. It will take 4-5 days for the confirmation of name. Once the name is confirmed, then it is valid for 90 days.
After getting name approval we have to prepare some Documents and forms for ROC Filing. Then file the forms to ROC . This process will take approx 10-12 days for preparation and filing of form and get approval of incorporation from MCA.
If annual turnover of LLP in any financial year exceeds Rs.40 lakhs or its contribution exceeds Rs.25 lakhs then LLP must have their account audited by Chartered Accountant.
Foreign Nationals or NRIs have to submit a proof of address also which will be a driving license, bank statement, residence card or any government issued identity proof containing the address.
If the documents are in other than the English language, a notarised or apostilled translation copy will be also be attached.
Proof of registered office has to be submitted during registration, or within 30 days of its incorporation.
If the registered office is taken on rent, rent agreement and a no objection certificate from the landlord has to be submitted. No objection certificate will be the consent of the landlord to allow the LLP to use the place as ‘registered office’.
Besides, anyone document out of utility bills like gas, electricity, or telephone bill must be submitted. The bill should contain complete address of the premise and owner’s name and the document shouldn’t be older than 2 months.
One of the designated partners needs to opt for a digital signature certificate also since all documents and applications will be digitally signed by the authorised signatory.