Limited Liability Partnership (LLP) is a form of partnership in any kind of business enterprise, where all the participating members have limited liabilities. This means that no single partner is responsible for the losses, negligence and/or misconduct of any other partner. Since all partners have limited and not total responsibility, this is known as Limited Liability Partnership. Unlike shareholders, partners possess the rights to manage the business as well. Owing to these characteristics, it can be said that LLPs seem to show characteristics of both corporations and partnerships.
Registering for an LLP is a relatively easy process that can be summed up in simple steps as mentioned below:
Step 1: Getting Digital Signature Certificate (DSC)
The first step towards registering LLP is to acquire the digital signatures of all the designated partners of the LLP. A digital signature is required since the LLP’s documents are filed online. These documents carry digital signatures that further helps in obtaining certificate.
Digital signatures required can be obtained from certified government agencies, such as National Informatics Center, IDRBT Certifying Authority, E-MUDHRA, CDAC and NSDL. The cost of acquiring a DSC will be according to the certifying agency that the applicant has applied for.
Step 2: Reserving the Name
To register a proposed LLP, the applicant needs to get a Limited Liability Partnership-Reserve Unique Name (LLP-RUN) that can be processed at the Central Registration Centre. However, before citing or quoting the name, it is always advisable to check from the Ministry of Corporate Affairs (MCA) portal for a free name. This will provide a list of companies with the same or similar names to a proposed LLP. Once the name has been chosen, the registrar will approve the name that is not very similar to any existing LLP. The LLP-RUN will need to be submitted along with a fee that will then proceed for the approval of the registrar.
Step 3: Incorporation of LLP
Form for incorporation of Limited Liability Partnership (FiLLiP) is required to be filled and submitted with the registrar for incorporation of LLP. Fees has to be paid as per Annexure ‘A’. Application for allotment shall be permitted to be made by 2 individuals only.
Step 4: File Limited Liability Partnership Agreement
This agreement governs the mutual rights and duties amongst the partners. The agreement can be filed in form 3 online on MCA Portal. From the date of incorporation, Form 3 for LLP agreement has to be filed within 30 days. LLP Agreement has to be printed on Stamp Paper, wherein every state has their different stamp paper.
It takes approximately 15 days to get DSC and Form 3, subject to availability of all the documents.
Documents Required for LLP Registration
The documents required to register your LLP are roughly the same as required for most business set-ups. However, there are two sets of documents that will need to be submitted for the LLP registration i.e. documents required of partners and the LLP documents.
All partners in the LLP will be required to submit the following:
- Identity proofs and PAN cards of all partners.
- Address Proofs of partners that includes Voter ID, passport or driving license.
- A passport size photograph against a white background.
- Passports of NRIs and foreign nationals who wish to become partners in an LLP.
Documents related to the LLP entity that need to be compulsorily submitted are:
- A proof of the registered office of address needs to be submitted at the time of registration or within a time span of 30 days of the incorporation of the LLP. In case, the registered office is a rented facility, an NOC from the landlord is necessary. Additionally, at least one proof of residence will need to submit such as utility bills that are no older than 2 months.
- A Digital Signature Certificate (DSC)
Cost involved in registration
Find below the cost involved in the registration process:
DSC – Around Rs. 1500-2000 for 2 partners
Name Reservation – Rs. 200
Incorporation – Depends on capital contribution
Contribution up to Rs. 1 lakh – Rs. 500 & Contribution between Rs. 1 and 5 lakh – Rs. 2000
LLP Agreement -Depends on capital contribution.
Contribution up to Rs 1 lakh – Rs 50 for filing Form 3 and stamp duty based on the state where LLP is formed
Limited Liability Partnerships in India
Limited Liability Partnerships in India are based on the Limited Liability Partnership Act of 2008. The Limited Liabilities Partnership Act 2008 was officially published on the 9th of January, 2009 in the official Gazette of India and has been effective since 31st March, 2009. The rules constitutive of this act were later published on the 1st of April, 2009 and amended in 2017. The official incorporation of the LLP happened on the 2nd of April, 2009. An LLP is attractive for many new entrepreneurs since the cost of forming an LLP is little; there is no minimum capital contribution and very few compliance regulations as compared to other kinds of business enterprises. Like many entrepreneurs seeking to become part of an LLP or set it up, you can avail of a range of business loans that will help you in starting a new business or for business expansion purposes.
Frequently Asked Questions (FAQs)
Q1. How much time does it take to register an LLP?
Ans. The total time for registering an LLP is approximately 15 days.
Q2. How much does it cost to register an LLP?
Ans. Registering for an LLP costs from Rs. 2500 – Rs. 6000 depending on the number of partners and the capital contribution.
Q3. What is the membership limit for an LLP?
Ans. The minimum members should be 2 whereas there is no upper limit of members in LLP.