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How to Register for Limited Liability Partnership?

Online Legal India LogoBy Online Legal India Published On 26 Oct 2020 Updated On 15 Oct 2022 Category Limited Liability Partnership

Whenever we think of business registration or any other form of trademark registration we look into the flexibility as of the essential nature. LLP or Limited Liability Partnership gives one liberty of flexibility and also where one partner is not liable for another partner's misconduct or delinquency.

Limited Liability Partnership Act, 2008 came into force in January 2009. Where a Limited Liability Partnership can be done with 2 members minimum and the maximum is unlimited whose liability remains limited to the capital investment. Where a partner's personal property is not liable for their firm's debt.

Who will issue Limited Liability Partnership Registration?

Well, a business registration can only be successful if it fulfils the criteria of the Ministry of Company Affairs. As mentioned in Form SPICe or Simplified Proforma for Incorporating a Company Electronically (INC_32). So, a business registration needs to be filled by companies before incorporation.

What are the requirements to start a Limited Liability Partnership?

An individual company formation needs to attain its prerequisites. While the essential details are mentioned below:

1. Members and Directors:

  • Minimum 2 people and the maximum is unlimited.
  • One member should hold the citizenship of India.
  • Foreign participation is allowed.

2. Documents of Partners:

  • PAN Card/ ID Proof of the Partners
  • Address Proof of the partners
  • Residence Proof of Partners
  • Photograph
  • Passport (in case of Foreign Nationals/ NRIs)

3Obtaining Other Documents for LLP: It is necessary to fulfil the authentication process so every company must have DSC or Digital Signature Certificate to verify the authenticity of the documents provided.

Benefits of Limited Liability Partnership

  1. No Liability: In LLP's the liability of partners in the partnership remains limited. 
  2. Separate Entity: An entity remains as a separate legal entity. Which also means the assets in its own name can or can be charged if found guilty. Also mentioned earlier no partner is liable for their misconduct of another partner or shareholder.
  3.  No distinct post for owner/manager: D Due to its structural difference with Private Limited Company on the note of directors and shareholders and their power of ownership. VC's afraid to invest in such a structure.
  4. Most Suited: To start a business with LLP registration because it easily meets the need of partners concerned with fewer too little formalities involved during incorporation. 
  5. No minimum capital required: Unlike other business, there is no minimum requirement that a partner needs to fulfil while registration.
  6. No limit on the owners/partners: This is one of the flexibility of LLPs where there can be an unlimited number of members. nature.
  7. Very Economical: The cost of registration of LLP is low as compared to any other company (Public or Private).
  8. Compulsory Audit not required: There is no requirement of auditing after the end of every financial year.
  9. DDT is not applicable: Well in a Limited Liability Partnership DDT is not applicable. Which means a partner doesn't require to pay the surcharge while withdrawing a profit from the company.
  10. Can be dissolved easily: Well it is a very seamless process one can think of starting it without any liabilities. So if it emerges out that a partner is suffering from heavy losses one can easily think of dissolution. It takes two to three months to complete the process. 

Limitations Of A Limited Liability Partnership

  • The penalty remains greater: In case of Liability Limited Partnership the penalty is levied is higher up to INR 5,00,000 if legal formalities are not fulfilled.
  • Rights of the partners: In LLP structure we see that a partner is not liable for another's miss conduct well lesser shareholders might have to compromise. In situations when few shareholders try to sway the business into the direction that affects their business.
  • Strenuous to get a loan: Banks goes after a lot of legalities while granting a loan for LLPs.   

Limited Liability Partnership Versus, Private Limited Company Versus Proprietorship Firm

CRITERIA

LIMITED LIABILITY PARTNERSHIP

PRIVATE LIMITED COMPANY

PROPRIETORSHIP FIRM

 

 

 

 

ACT

Limited Liability Partnership Act, 2008

Companies Act 2013

Companies Act 2013

REGISTRATION

Mandatory

Mandatory

Mandatory

 

 

 

 

MEMBERS

2- Unlimited

2-200

2-200

 

 

 

 

SEPARATE LEGAL ENTITY

YES

YES

YES

 

 

 

 

LIABITITY PROTECTION

LIMITED

LIMITED

LIMITED

 

 

 

 

STATUTORY AUDIT

DEPENDENT

MANDATORY

MANDATORY

 

 

 

 

OWNERSHIP TRANSFER ABILITY

YES

RESTRICTED

RESTRICTED

 

 

 

 

UNINTERUPTED  EXISTENCE

YES

YES

YES

 

 

 

 

FOREIGN PARTICIPATION

ALLOWED

ALLOWED

ALLOWED

 

 

 

 

TAX RATES

HIGH

MODERATE

MODERATE

 

 

 

 

STATUTORY COMPLIANCE

MODERATE

HIGH

HIGH

How can Online Legal India™ help you?

 Our in house expert shall be assisting you with the necessary compliance after LLP Incorporation. We all know how time and money consuming legal proceedings are Government officials take their own sweet time and ask you to pay extra just to get the job done. If you too are running to meet ends while incorporating a company it would be a smart move to go for an online mode. Register your Limited Liability Partnership. To know more about the registration process contact our in house experts. We give economical services to ones who are willing to start up a company/business or any other kind of organization. 


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