A Limited Liability Partnership (LLP) is a corporate structure that combines the flexibility of a partnership with the limited liability of a company.
An LLP Registration restricts the liability of its partners to their agreed-upon contribution while simultaneously enabling them to establish their internal structure as a partnership in accordance with a mutually agreed-upon arrangement.
This hybrid model enables individual stakeholders to actively engage in management while simultaneously protecting them from the business’s debts and liabilities.
Let’s know why it is in demand
Limited Liability Protection: The LLP company registration safeguards the personal assets of individual partners. This shield guarantees that personal assets are not affected by business liabilities during the turbulent early phases of a startup when financial uncertainties are common.
Compliance Ease: LLPs enjoy simplified compliance requirements in contrast to conventional corporate structures. The administrative burden on businesses is diminished as a result of the reduced burden of the annual filing obligations. It enables entrepreneurs to concentrate more on the operations and expansion of their businesses.
Operational Flexibility: Partners are permitted to organise their internal administration in accordance with their preferences through a Limited Liability Partnership. The decision-making hierarchy and the distribution of profits are not subject to any strict requirements. This adaptability fosters innovation within the venture by promoting a collaborative and adaptive approach.
Ease of Formation: In comparison to other business structures, the LLP registration process is relatively simple to establish. The registration procedure is simplified, which minimises the time and effort necessary to establish the business legally. It enables entrepreneurs to capitalise on market opportunities and get off the ground quickly.
Credibility: When interacting with banks, financial institutions, authorities, and clients, the LLP model is more credible than that of proprietorships and partnership firms.
Perpetual Existence: LLP’s existence is unaffected by changes in its partners because of its perpetual nature. The LLP remains intact even in the event of a partner’s withdrawal, insolvency, or death.
Quick Ownership Transfer: By inducting a new partner, an LLP’s ownership can be effortlessly transferred to another individual. Compared to transferring a company’s shares, this process is easier.
Separate Legal Entity: A separate legal entity exists between an LLP and its partners. As a result, LLP lifespans can continue even if partners shift.
Recognition on a Global Scale: LLPs are acknowledged and approved company structures globally. This may prove advantageous for companies seeking to grow internationally.
No Mandatory Audit: An LLP in India is required to have its accounts audited if its turnover exceeds₹40 lakhs or if the capital contribution surpasses ₹25 lakhs during a financial year. If these limits are not crossed, the audit remains optional
No minimum capital or turnover requirement: There is no minimum capital investment requirement or minimum turnover. Thus, it is simple to establish businesses. Speaking with an expert to learn the particular benefits depending on your business and objectives is always a good idea.
An LLP Registration Process Checklist in India
The following requirements provided in our LLP registration process checklist must be satisfied for any Limited Liability Partnership (LLP) to be registered in India.
Two Partners: A Limited Liability Partnership (LLP) needs two designated partners at the very least, At least one of the company’s Partners needs to be an Indian citizen.
Distinguished Name: Your business name needs to be distinctive. The suggested name shouldn’t be similar to any active Indian trademarks or organisations.
Minimum Investment Requirement: A LLP does not have to have a minimum capital contribution.
Registered Office: The LLP can also consider having a rented place as their registered office, there is no mandate on purchasing a property for the office setup.
Documents Needed in India to Register an LLP
The partnership firm’s and both partners’ documents must be provided to register the LLP.
Partners’ Documents
ID Verification of Partners: Each partner must present their PAN when registering an LLP.
Proof of Residence for Partners: A partner may provide any document as proof of residency, including an Aadhar card, a passport, a driver’s license, and utility bills no more than two months old.
Photograph: Partners must also submit a passport-sized photo of themselves, ideally against a white background.
If a foreign national or NRI, they must provide their passports to be accepted as partners in Indian LLPs.
In addition, foreign nationals, or NRIs, must provide proof of address, such as a driver’s license, bank statement, residence card, or other identifying document issued by the government that includes the address.
Documents of LLP
Verification of Registered Office Address: Proof of registered office must be provided during registration or within 30 days of incorporation. A rent agreement and a landlord’s no objection certificate are required if the registered office is rented out.
Certificate of Digital Signature: Since the authorized signatory will digitally sign all documents and applications, one of the chosen partners must also select a digital signature certificate.
Thus, the LLP Registration Process provides substantial advantages for entrepreneurs and professionals who operate joint business ventures. It offers the operational flexibility of a partnership while also providing limited liability.
The concept of an LLP is that one partner is not held responsible for the recklessness or transgression of the other. Furthermore, it allows the LLP’s associates to manage the business directly and provides the owners with limited liability protection against the LLP’s obligations.
With JustStart by your side, you can easily manage the formation of an LLP, under the direction of knowledgeable experts who will make sure everything goes well from the beginning to the end.
FAQs
Can an LLP have partners from a partnership firm?
Ans. No, as “Any individual or body corporate may be a partner in a limited liability partnership,” according to Section 5 of the LLP Act 2008. However, partnership firms are not specifically included in the definition of “body corporate” found in Section 2(d). Partnership firms cannot form an LLP because they are not considered body corporates.
Can one individual form an LLP?
Ans. An LLP can only be formed with a minimum of two partners. The maximum number of partners will be subject to an upper limit of 200 partners.
Can an NRI or Foreign person join an LLP as a partner or director?
Ans. Yes, foreigners or NRIs can serve as LLP directors or partners. However, there must be a mandatory presence of one Partner who must be an Indian Citizen.
Does an LLP have to keep records and registers?
Ans. LLPs have less stringent compliance requirements since they are exempt from mandatory meetings and statutory register maintenance.
