What is LLP (Limited Liability Partnership Company)?
The Limited Liability Partnership (LLP) is legal entity under which one can enjoy the benefit of limited liabilities and general partnership. The LLPs are governed by the Limited Liability Partnership Act 2008.

It is an upgraded version of general partnership and the partners are knows as Designated Partners. In LLP partners can enjoy the benefit of limited liabilities. The registration of LLP is a very simple process and is proffered most as it has lesser compliance to follow. LLPs are most recommended for professional firms, micro and small businesses that are family-owned or closely-held.

The partners in LLP have limited liability, meaning that personal assets of the partners can’t be used for paying the debts of the company. Designated partners are liable only to the extent of their contribution in the LLP mentioned in the agreement. Even if there are number of partners, each partner is liable for their own decisions not for the other partner’s misconduct. In this way, all the partners are shielded from the joint liability.

The LLP is executed between the partners and the LLP agreement determines the mutual rights, duties, and responsibilities of the partners. The LLP agreement must be printed on stamp paper and the stamp duty to be paid on the LLP agreement is depends on the state of in which the LLP is incorporated and amount of capital contribution from the partners

Is LLP right for you to start?
If you don’t want to take responsibility or liability for another partner’s misconduct, incompetence or negligence and also want to limit your liabilities for the debt and losses, also want to enjoy tax benefits. Then LLP is the best option to go with.

Funding or Borrowing Capital
It’s easy for LLP to get funding or borrow capital from banks/Financial Institutes in comparison to Sole proprietorship and Partnership type.

Benefits/Characteristics of the LLP Formation

• Separate legal entity: The LLP enjoys the status of a separate legal entity like a company where partners are different from the company.
• Easy to form
• Liability – the partners have limited liability which means they are not liable to pay the debts of the company from their personal assets. No partner can be held responsible for the conduct of other partner’s misconduct.
• Easy transfer-ability of ownership: The transfer of ownership is easy, as it is easy to admit or leave a partner.
• Perpetual succession: According to the provisions of the Act, the LLP will not be winded up in case of death, retirement or insolvency of a partner. The LLP is not affected by the same; it can continue its work.
• The inclusion of foreigners: According to the Act, foreign nationals including foreign companies can be incorporated to form an LLP in India. In this case, at least one designated person must be resident of India.
• To begin an LLP, minimum of two members are required. There is no upper limit set for the maximum number of partners.
• No compulsory audit required: the audit in case of LLP is not mandatory, unless:
1- If the contribution of the LLP exceeds 25 lakh rupees.
2- If the turnover of the LLP exceeds 40 lakh rupees annually.

LLP Company Taxes

• LLP requires to file the annual return with the Income Tax Department
• Annual account audit is flexible and not applicable if turnover less than Rs.40 Lakhs per annum.

Documents required for LLP registration
• PAN Card or Passport (Foreign Nationals & NRIs)
• Voter’s ID/Passport/Driver’s License
• Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
• Passport-sized photograph
• Specimen signature (blank document with signature [partners only])
• Any Utility bills
• Scanned copy of Rent agreement with NOC from owner

How to incorporate LLP Online?

Step 1: Obtain DSC (Digital Signature Certificate)
• It’s necessary to apply for a Digital signature of the designated partners before starting the LLP Registration process.
• The DSC is important as all the documents before submission are required to be digitally signed.

Step 2: Apply for DIN (Director Identification Number)
• The application for DIN is mandatory for every designated partner.
• The DIN application has to make in Form DIR-3.

Step 3: Name Approval and its Reservation
• The LLP name approval is an important step to establish a company.
• RUN (Reserve Unique Name) form is filled for the reservation of the name given by LLP.
• The name provided must be as per the rule 8 of Company Registration Act, 2013

Step 4: Incorporation of LLP
• For the Incorporation of LLP the incorporation form is to be filled with Registrar of companies of the respective state in which the registered office of the LLP is located.

Step 5: Submission of Limited Liability Partnership Agreement/ LLP Agreement
• LLP agreement involves the rights and duties amongst the partners and also among the LLP and its partners.
• LLP agreement must be submitted in form 3 within 30 days of the date of incorporation.

Limitations of LLP

• LLP cannot be formed by a single person. If any NRI/ Foreign national wants to form an LLP in India, then at least one partner should be a resident of India.

• Not preferred by Venture Capitalist for funding: VCs would be unwilling to invest in an LLP structure. As per the LLP agreement all ‘shareholders’ in an LLP must be partners, with certain responsibilities toward the entity. Investors usually want to invest only so they prefer private limited company.

• Rights of partners: An LLP can be structured in such a way that one partner has more rights than another. There is no one vote per share system. This can lead to feel compromised if higher shareholders choose to move the business in a direction that affects their interests.

• High penalties: compliances in A LLP are minimal, but one does not complete them, it could end up paying penalties more than a private limited company.

• Permission of Foreign Direct Investment (FDI) in LLP – As per FDI Policy, FDI in LLP is allowed only through Government route, FDI in LLP under automatic route is not permissible.

Three Easy Steps to Apply for LLP
• Fill out our basic requirement form
• We’ll collect all your documents and file them directly with the authority
• You’ll receive your completed LLP package by E-mail