Limited Liability Partnership ( LLP ) India – an overview

Limited Liability Partnerships were governed by LLP Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners. The incorporation of LLP is very easy when compared to other legal entity’s with simple set of compliances. LLPs need only 2 Designated Partners and a LLP Agreement to commence its business operations.

Benefits of obtaining Limited Liability Partnership India

1. A right to sue can be available for partners only upon getting LLP registered. It is a juristic person and a separate legal entity.
2. It helps to follow going concern untill the partners came into an agreement to dissolve, even death of partner may not cause the LLP to close the business.
3. The liability of partners is limited, which relieve the partners to get their personal assets into business for purpose of paying liabilities.
4. The ownership can be transferred easily.
5. It helps to have legal support for the formal agreement entered by the partners to do such business.
6. Entrepreneurs earning 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 startups and small businesses that are just starting their operations and want to have minimal regulatory compliance related formalities.

Process of obtaining LLP Registration India

Step 1: Before incorporating check the availability of name, the registrar approves only those names which are not registered already. Name search can be done through MCA portal.
Step 2: Obtain Digital Signature for the partners and directors, In case of directors the law requires all directors to fill Form – DIR 3 for filing DIN.
Step 3: FiLLiP is to be filed for incorporating the LLP and required documents to be uploaded. Then such filed FiLLiP filed should be uploaded along with the prescribed fee.
Step 4: After verifying the geniuness of the details provided the registrar will approve the incoporation and issues an incorporation certificate.

Documents required for LLP incorporation India

1. Identity and Address proof of partners.
   • Aadhar/ Voter ID/ Driving License
   • PAN card
   • Latest Bank Statement.
2. Proof of address for business
   • Rental Agreement/ Utility Bills – if rented
   • Property Tax receipt – if owned
3. Scanned passport-sized photograph Specimen signature (blank document with signature [partners only] 4. Partnership Deed.

General FAQ – LLP Registration

1. What are the rules of strating an LLP ?
Any group of persons who have or want to invest money in a business can start an LLP. A person or an investor becomes a partner, according to the LLP agreement, as provided in the Act of 2008. Also, the investors/partners are owners of the business started under the LLP.

2. Is there any minimum capital requirement ?
There is no minimum capital contribution requirement. It can be registered even with Rs. 100 as total capital contribution.

3. Do it require any Preliminery documents ?
Except Partnership agreement and documents specified above are required.

4. What is the impact of Income Tax on LLP ?
Both general partnerships and LLPs are taxed at flat rate of 30%. All the other income tax act provisions apply similarly except that general partnership firms are covered under presumptive taxation scheme i.e if turnover is below Rs. 2 crore in business or Rs. 50 lakh in case of profession, there is no need to maintain books of accounts or get accounts audited whereas, LLPs are explicitly not covered.

5. Can NRI have LLP in India ?
NRI can incorporate LLP in india and document need to be submitted as identity is his/ her Passport.