LLP Registration Online In India

A Limited Liability Partnership (LLP) is a unique business structure that merges the features of a company and a partnership. LLP is introduced under the LLP Act, 2008, which offers flexibility, shared responsibility, and limited liability protection. Its simple structure and lower compliance costs make it an ideal option for startups, professionals, and small businesses looking for ease and legal security.

In this blog, you will learn about LLP registration online in India, including the process, documents required, benefits, and more.

What is an LLP?

A Limited Liability Partnership (LLP) is a unique business structure combining the flexibility of a partnership with the limited liability protection of a company. This is governed by the LLP Act of 2008. It protects partners by limiting their liability to the amount they invest, so personal assets are safe from business debts. LLPs are popular in India, especially among professionals and small to medium businesses. They offer flexibility in operations along with protection from personal financial risk.

Key Features of an LLP

Here is the list of key features of an LLP:

1. Separate Legal Entity

An LLP is a distinct legal entity that is separated from its partners. It can own property, enter into contracts, and engage in legal actions under its own name. This separation ensures clarity in legal matters and business operations. This provides partners with limited liability and operational flexibility.

2. Limited Liability

In a Limited Liability Partnership (LLP), each partner’s financial responsibility is restricted to the amount they agreed to invest. This protects their personal assets from the LLP’s debts and obligations.

3. No Minimum Capital Requirement

One of the key benefits of an LLP is that there is no fixed minimum capital required to form an LLP. This makes it more affordable and accessible for small businesses and startups to begin.

4. Flexible Management Structure

An LLP provides a flexible way to manage the business. The partners decide their roles and responsibilities through a formal agreement. Designated partners take care of daily operations. This helps the business to operate smoothly based on mutually agreed terms.

5. Perpetual Succession

An LLP keeps running smoothly even if a partner leaves or passes away. Changes in the partnership do not affect its existence. This helps the business continue without interruption.

6. No Dividend Distribution Tax

LLPs do not have to pay Dividend Distribution Tax like other companies. This means partners can save money on taxes when profits are shared.

7. Statutory Registers Requirement

According to Rule 22A of the LLP Rules, 2023, every LLP is required to keep a register of partners using Form 4A. This register includes important details like each partner’s name, address, PAN, and their contribution. This enhances transparency and clear accountability.

8. Compliance with Accounting Standards

LLPs are required to maintain books of accounts and comply with accounting standards prescribed by the Central Government. This ensures financial transparency and proper record-keeping.

9. Taxation Similar to Partnership Firms:

LLPs follow a tax system similar to that of partnership firms. The LLP pays tax on the income it earns as a business entity. Partners are not taxed on the total earnings of the LLP. Instead, they are taxed only on the share of profits distributed to them.

10. Conversion Flexibility:

LLPs offer the option to convert existing partnership firms, private companies, or unlisted public companies to restructure a business as needed.

Eligibility Criteria for LLP Registration

Here is the eligibility criteria for LLP registration:

Certain eligibility criteria must be met, as outlined by the Ministry of Corporate Affairs (MCA) to register a Limited Liability Partnership. Below are the key requirements:

1. Minimum Number of Partners

An LLP must have at least two partners to start but can have unlimited partners. These partners can be either individuals or corporate entities. This allows flexible business participation.

2. Designated Partners

At least two designated partners are required, and at least one of them must be a resident of India. This means they should have lived in the country for 182 days or more in the previous financial year. Designated partners must be individuals, not minors, and should not be declared insolvent or undergoing insolvency.

3. Designated Partner Identification Number (DPIN)

Each designated partner must obtain a DPIN, which is mandatory for all designated partners.

4. Registered Office

The LLP must have a registered office in India.

5. Compliance with Foreign Direct Investment (FDI) Norms

If any partner is a foreign national or if the LLP has foreign investment, it must comply with Foreign Direct Investment (FDI) norms.

6. No Minimum Capital Requirement

There is no minimum capital requirement to form an LLP.

7. LLP Agreement

An LLP agreement must be executed and filed with the Registrar within 30 days of the incorporation of the LLP.

8. Compliance with the Indian Partnership Act, 1932

The provisions of the Indian Partnership Act, 1932, shall not apply to an LLP, except as provided in the LLP Act.

Documents Required for LLP Registration

The following are the necessary documents required for LLP registration:

1. For Partners

• PAN Card: Mandatory for Indian nationals.
• Proof of Identity: Passport, Voter ID, Driving License, or Aadhaar Card.
• Proof of Address: Recent utility bills (electricity, water, gas), bank statements, or telephone bills not older than two months.
• A Passport-sized photograph with a white background.

2. For Foreign Nationals:

• Passport: Mandatory and must be notarized or apostilled.
• Proof of Address: Bank statements, utility bills, or driving license, duly notarized or apostilled.

3. For Registered Office:

• Proof of Address: Utility bill (electricity, water, gas) or property tax receipt not older than two months.
• No Objection Certificate (NOC) from the property owner if the premises are rented.
• Rent Agreement or Sale Deed (if the property is rented or owned).

4. Other Documents:

• Digital Signature Certificate (DSC) for all designated partners.
• Each designated partner must secure a Designated Partner Identification Number (DPIN).
• LLP Agreement

Procedures for LLP Registration online in India

Here is a step-by-step process for LLP Registration online in India:

Step 1: Obtain a Digital Signature Certificate (DSC)

Every designated partner needs to obtain a Digital Signature Certificate (DSC), either Class 2 or Class 3. This certificate is essential for signing documents online and is required for filing forms on the Minister of Corporate Affairs (MCA) portal.

Step 2: Obtain a Designated Partner Identification Number (DPIN)

You are required to apply for a Designated Partner Identification Number (DPIN) for all proposed designated partners to register an LLP. This is done by submitting Form DIR-3, along with scanned copies of required documents like PAN and Aadhaar. The form must be digitally signed by a practicing professional such as a Company Secretary, Chartered Accountant, or Cost Accountant.

Only an individual, also known as a natural person can become a Designated Partner in an LLP. This means companies, LLPs, or other legal entities cannot apply for a DPIN or act as designated partners in the firm.

Step 3: Reserve Unique Name (RUN-LLP)

You must propose a unique name using the RUN-LLP service available on the MCA portal. The suggested name should follow the official naming guidelines to prevent delays or rejection.

Step 4: File Form FiLLiP (Form for Incorporation of LLP)

Form FiLLiP must be filled and submitted online through the MCA portal to incorporate an LLP. This form includes the proposed LLP name, office address, details of partners, and their consent.

Step 5: Draft LLP Agreement

The LLP Agreement should be carefully drafted to define the roles, responsibilities, and duties of both the partners and the LLP. Once prepared, it must be notarized and submitted to the Ministry of Corporate Affairs within 30 days of the LLP’s incorporation. The LLP Agreement must be printed on stamp paper. The value of the stamp paper varies from state to state. It depends on the local rules and stamp duty rates.

Step 6: Obtain a Certificate of Incorporation

The Registrar of Companies (RoC) issues the Certificate of Incorporation after all required forms and documents are filed and verified. This certificate officially confirms that the LLP is officially registered and recognized as a separate business entity.

Step 7: Apply for PAN and TAN

Once you receive the Certificate of Incorporation, you must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the LLP. These are necessary for tax-related activities and compliance.

Step 8: Register for GST (if applicable)

If the LLP’s annual turnover crosses the set limit of Rs. 20 lakhs (Rs. 10 lakhs for special category states) or if it plans to conduct business across state borders, it must register for GST. This can be done easily through the official GST portal.

Step 9: Open a Bank Account

A current bank account should be opened in the name of the LLP by submitting the Certificate of Incorporation, PAN, and a copy of the LLP Agreement.

Step 10: Maintain Compliance

An LLP must follow yearly compliance by filing two important forms. Form 11, the Annual Return, should be submitted within 60 days of the financial year ending. Form 8, which includes the Statement of Account and Solvency, must be filed within 30 days after six months of the year’s end.

Benefits of Limited Liability Partnership (LLP) Registration

Here is the benefits of LLP registration:

1. Separate Legal Entity

An LLP is treated as a separate legal entity that is different from its partners. It can own property, take on debts, and sign contracts in its own name. Even if partners change, the LLP (Limited Liability Partnership) continues to exist without any effect on its legal status.

2. Limited Liability Protection

In an LLP, each partner is responsible only for the amount they agreed to contribute. They are not personally answerable for the LLP’s debts. Furthermore, one partner is not liable for another partner’s actions which helps to protect individual assets.

3. No Minimum Capital Requirement

There is no statutory requirement for minimum capital to start an LLP. This allows partners to determine the capital contribution based on mutual agreement.

4. Flexibility in Management

LLPs provide flexible management, where partners can decide their roles and responsibilities based on mutual agreement. This setup is more adaptable compared to the fixed and formal structure followed by companies.

5. No Limit on Number of Partners

An LLP can have an unlimited number of partners. This provides scalability for growing businesses. This contrasts with traditional partnerships, which are limited to 20 partners.

6. Reduced Compliance Burden

LLPs are subject to fewer compliance requirements compared to companies. For instance, an audit is mandatory only if the LLP's annual turnover exceeds Rs. 40 lakhs or if the capital contribution exceeds Rs. 25 lakhs.

7. Tax Advantages

LLPs enjoy certain tax benefits that make them more efficient. They do not have to pay Dividend Distribution Tax, and the profits shared with partners are not taxed again. This helps avoid the double taxation faced by companies.

8. Perpetual Succession

An LLP continues to operate regardless of changes in its partners, maintaining business stability and continuity.

9. Ease of Conversion and Exit

LLPs can be easily converted into private limited companies and vice versa. This helps to provide flexibility for business restructuring. The process for winding up a Limited Liability Partnership (LLP) is more straightforward compared to companies.

10. Professional Credibility

Many professionals like chartered accountants, lawyers, and consultants choose the LLP structure because it boosts the firm’s credibility. This trusted format helps build a strong reputation and gain more confidence from clients and partners.

Conclusion

Registering an LLP offers several important benefits, such as protecting personal assets through limited liability, allowing flexible management, providing tax advantages, and more for entrepreneurs and professionals. It provides a balanced structure that supports growth while safeguarding personal assets. It is important to follow the registration process and meet all compliance requirements on time for smooth business operations. Choosing an LLP can be a smart and practical decision for building a successful and reliable business. If you want to register an LLP for your business, contact Online Legal India. They have experts to assist you.