Limited Liability Partnership (LLP)

What do you mean by LLP registration?

Limited liability partnership (LLP) is one of the forms of business organization in India. In comparison to the general partnership, it offers numerous benefits to business owners. As a result, it offers advantages of a corporate as well as of a general partnership.

LLP is the preferred form of business among professional service providers and small and medium size business owners. LLP registration in India is generally opt by the businesses which are family-based or closely held by few people.

Limited liability partnership registration is the official process of incorporation of LLP form of business organization. To obtain the certificate of incorporation, business partners are required to submit the necessary documents to Ministry Corporate Affairs.

Every LLP in India is required to add the word LLP™ as suffix at the end of the LLP's name as per the Limited Liability Partnership Act, 2008 which also governs the conduct of LLPs in India

Benefits of an LLP Registration in India?

Limited Liability

The liability of all the partners is limited in an LLP. The personal assets of the partners are secured and will not be seized in case the company incurs any losses from its business operations.

It also means that the partner gets immunity when any consequences that arise as a result of the bungle done by the other partners.

Registration with No requirement of Capital

To incorporate the LLP, no minimum capital is required to invest.

No audit requirement

Audit is required only when the annual turnover crosses the limit of 40 lakhs INR or the capital contribution exceeds 25 lakhs INR.

Transfer of ownership is easy

Transfer of ownership in an LLP is easy; the introduction of a new partner in LLP is independent of its existence.

Separate legal entity

The Principle of Perpetual Succession is being followed in case of LLP and has a separate legal entity. The addition of a new partner or an exit of existing one does not dissolve its existence. Additionally, the ownership of assets of the business is not owned by the partners.

Minimum Requirements to Register an LLP Firm

Minimum of two designated partners

There is no restriction on the number of partners (Partners can be either Individual or Body Corporate) but there must be 2 designated partners in LLP firm.

One Indian Partner

Among 2 Designated Partners, there must be one Indian Designated Partner.

Designated Partner Identification Number

DPIN (Designated Partners Identification Number) for all Designated Partners

Digital Signature Certificate

DSC (Digital Signature Certificate) for all the Designated Partners

Registered office

Address proof for the registered office. (Office can be either a commercial or residential place) is required.

Necessary Documents for LLP Incorporation in India

The following sets of documents are mandatory to register an LLP:

A. From all Designated Partners

• Permanent Account Number Card: All the partners of the firm are required to provide the copy of their PAN
• Aadhaar Card: It is mandatory for all the partners to provide a copy of their aadhaar card.
• Address proof: Latest Bank Statement / Telephone or Mobile Bill subscribed on the name of the proposed partner.
• Identity proof:  At the time of incorporation, partners can provide their Voter's ID/Passport/Driver's License.
• Photograph:  All directors and shareholder’s Passport-sized photograph.
• Passport: (In case of NRI or foreign national as a partner): Passport should be notarized by the relevant authorities as applicable.

B. For Proposed Registered Office (Residential or Commercial)

• Latest Registered Address Proof (electricity bill or property tax receipt or water bill or landline bill)
• No Objection Certificate (NOC) from the owner
• If the property is on rent then Scanned copy of Notarized Rental Agreement is required.

What is the LLP Registration Procedure in India?

Follow the following steps to register LLP in India:-

Step 1: Apply for Digital Signature Certificate (DSC)

The first thing to do is to file an application to obtain DSC for all Proposed Designated Partners. To file the LLP registration, ROC compliance forms, and Tax returns, DSC would be used.

Step 2: Approval of Name

Name Approval form shall be filed to ROC through LLP RUN (Reserve Unique Name) facility which is available on the Ministry Corporate Affair portal.

Through this method, maximum 2 names can be applied . Registrar takes at least 2 days to approve the name of the company.

Step 3: Filing of Incorporation Application

Incorporating application is filed in e-Form FiLLiP™ once the name is approved by the registrar. Fees for LLP registration is mentioned at the Ministry of Corporate Affairs website.

Details of the proposed designated Partners and all the supporting documents as attachments are included in the Incorporation Application.

This application is filed with the registrar who has jurisdiction over the state in which the registered office of the LLP is located.

Step 4-Filing of Limited Liability Partnership Agreement

Duly notarized partnership agreement in Form-3 within 30 days of incorporation is required to be submitted by the applicant on the MCA portal once the completion of LLP registration and receipt of Certificate of Registration from MCA is obtained.

Step 5-File Permanent Account Number Application

The applicants are required to file the PAN Application for the newly registered LLP and are required to provide all the details and relevant documents once the LLP registration procedure gets completed.

Note: Earlier applicants were required to acquire Designated Partner Identification Number (DPIN) before filing for name reservation. However, this requirement has been removed in LLP (2nd Amendment) Rules, 2018. But now, MCA directly allots DPIN along with successful LLP registration in India

LLP Registration Fees in India

The total cost of getting a LLP Registration includes the cost of Digital Signature Certificate (DSC) for 2 Partners, Designated Partner Identification, and Number (DIN) for 2 Partners, LLP's Name Reservation Fee, Incorporation Fee, and Notary & Stamp Charge along with Professional fees may cost around Rs 7999 INR.

Compliance Requirements for a registered LLP Firm

A. POST- INCORPORATION COMPLIANCES

The newly incorporated LLP is required to complete following compliances once Limited Liability partnership registration gets completed. Such compliances are not repetitive and are one time in nature.

1. Partnership Agreement Filing

When the Ministry of Corporate Affairs approves the incorporation form, then registration of LLP is confirmed. However, the registration process does not end here and is still in progress.

Form-3 is required to be filled by the partners to register the partnership agreement within 30 days from the date of LLP registration.

2. Apply for Permanent Account Number & Tax Deduction Account Number

The LLP is also required to apply for Permanent Account Number & Tax Deduction Account Number, along with Ministry of Corporate Affairs (MCA) related filing because bank account cannot be opened until the PAN is issued.

3. Open Bank Account

To begin a financial transaction, Open LLP’s Bank Account

B. ANNUAL COMPLIANCES REQUIREMENTS AFTER THE LLP REGISTRATION

Annual compliance requirements are to be complied by LLP once the formation process gets completed. Fulfilling such compliances is necessary irrespective of the fact whether the business has started or not. The LLP will file NIL return in case the number of transactions is zero.

Following returns are required to be filed:

1. Statement of Account & Solvency

In LLP Form 8, Statement of Account & Solvency is required to be filed by 30th October of each financial year.

A practicing professional including a chartered accountant, company secretary or cost accountant certifies such documents.

2. LLP Annual Return

In LLP Form-11, Annual return is filed with Registrar of Companies by 30th May of each year i.e. within 60 days from the closing of every financial year.

3. Income Tax Return

Another mandatory annual compliance requirement is filing of Income Tax Return. Every LLP has to submit their income tax return by 30th September every year in form ITR 5 after the registration of LLP.

​ Penalty Provisions in case of LLP annual compliance default?

In the case of Ministry of Corporate Affairs Filing

It is mandatory to file all the prescribed compliance annually according to Limited Liability Partnership Act, 2008. Failure of filing Form 8 and Form 11 attracts penalty provision for reporting LLP’s financial statements and annual return.

Penalty Amount

For each compliance, that is not filed, there is a fixed amount of Rs. 100 per day and no such maximum limit is specified.

In the case of Income Tax Return Filings

Along with annual filing, every registered LLP is required to file income tax return under Income Tax Act by 30th September every year.

Penalty Amount

Penalty of Rs. 5,000 is imposed where any LLP is failed to file Income Tax Return under the Income Tax Act by 30th September and the same has to be completed by 31st December of that year.

Penalty amount will double up to Rs. 10,000 in case where the LLP fails to meet the above extended date for filing of Income Tax Return..