Limited Liability Partnership

A limited liability partnership (LLP) is a type of partnership in which each participating member's liability is kept to a minimum in any commercial venture. In India, entrepreneurs increasingly choose Limited Liability Partnerships (LLPs) as their preferred organizational structure. 

The advantages of a company and a partnership firm are combined in an LLP. Lawgical Adda has carefully selected this guide to give you priceless insights and ensure your path to LLP registration is successful and seamless.

What is an LLP?

A limited liability partnership (LLP) is a business organization that combines the flexibility of a partnership with the limited liability protection of a corporation. An LLP protects each member from being personally liable for the business's financial obligations and debts, adding a crucial degree of security for individual assets.

Characteristics of LLP:

1. Like companies, it is a distinct legal entity.
2. A minimum of two individuals must form an LLP as partners. 
3. The maximum number of partners has no upper bound.
4. A minimum of two partners must be assigned.
5. India must be the home country of at least one recognized partner.
6. Each partner's liability is capped at their contribution.
7. The formation of an LLP is inexpensive.
8. Less rules and compliance.

Steps for Limited Liability Partnership Registration

The procedure of registering for an LLP is straightforward and can be boiled down into the following easy steps:

Obtaining a Certificate of Digital Signature (DSC)

The first stage in registering an LLP is getting the digital signatures of each of its selected partners. All documents filed with the LLP must have a digital signature, which further facilitates the certificate-obtaining process.

Government organizations with certification, like the National Informatics Center, IDRBT Certifying Authority, E-MUDHRA, CDAC, and NSDL, can provide the necessary digital signatures. The applicant's application for certification will determine the cost of obtaining a DSC.

Reserving the Name

To register a proposed limited liability partnership, the applicant must get a Limited Liability Partnership-Reserve Unique Name (LLP-RUN), which can be processed at the Central Registration Center. It is generally suggested that you first look up a free name on the Ministry of Corporate Affairs (MCA) portal.

 This will yield a list of businesses with the same name as the proposed limited liability partnership. The chosen name must not be too similar to any existing LLP for the registrar to approve it. The LLP-RUN must be filed with the appropriate fee to proceed with the registrar's approval.

LLP incorporation

The FiLLiP (Form for incorporation of Limited Liability Partnership) is the form used for incorporation. It must be filed with the Registrar, who has jurisdiction over the state in which the LLP's registered office is located. The fees listed in Annexure "A" must be paid.

If the person who is going to be appointed as a designated partner does not currently have a DIN or DPIN, this form also allows them to apply for a DPIN allocation. Only two people can submit an allocation application. It is also possible to apply for a name reservation via FiLLiP. If the proposed name of the LLP is accepted, this approved and reserved name will be used.

Register a Limited Liability Partnership.

This agreement governs the partners' reciprocal rights and obligations. Form 3 of the agreement may be submitted electronically via the MCA Portal. Form 3 for an LLP agreement must be filed within thirty days of the incorporation date. Every state has a particular stamp paper that must be used for printing LLP agreements.

Subject to the availability of the necessary paperwork, the processing time for DSC and Form 3 is roughly fifteen days.

Documents required for LLP registration in India

1. PAN Card/ID Proof of Partners: When registering an LLP, each partner must present their PAN card, which provides primary ID proof.
2. Proof of Residence for Partners: A partner may provide proof of residence through an Aadhar card, voter ID, passport, driver's license, or utility bills no more than two months old. The name and other information should match the exact difference between the PAN card and the evidence of residency. 
3. Photograph: Partners must also submit a passport-sized photo of themselves, ideally against a white background.
4. Passport (for foreign nationals and NRIs): Foreign nationals and NRIs must submit their passports to be accepted as partners in an Indian limited liability company (LLP). The appropriate authorities must issue apostilled or notarized passports in the foreign national's country.
5. Proof of Registered Office Address: Proof of registered office must be provided upon registration or within 30 days of incorporation. A rent agreement and a landlord's no-objection certificate are required if the registered office is rented out. The landlord's permission for the LLP to use the space as a "registered office" will be reflected in the no-objection certificate. In addition, all utility bills, including those for gas, electricity, and telephone service, must be turned in. The bill must be at most two months old and contain the owner's name and the entire property address.
6. Digital Signature Certificate: Since the authorized signatory will digitally sign all documents and applications, one of the selected partners must also choose to obtain a digital signature certificate. 

Compliances of a Limited Liability Partnership

Submit an annual return: The Registrar of Companies (ROC) requires LLPs to submit an annual turnover return each year. This return must be filed within sixty days following the end of the LLP's fiscal year. The LLP's registered address, the names and addresses of its partners, and the specifics of its revenue and expenses for the year must all be included in the annual turnover return.

Keep accurate accounting and financial records: LLPs are required to keep accurate accounting and financial records. After the preparation date, these records must be preserved for at least eight years. Every year, LLPs are also required to prepare audited financial accounts. After the partners approve them, these statements must be submitted to the ROC within 30 days.

Designation: The designation of a designated partner is mandatory for all limited liability partnerships (LLPs). The designated partner is accountable for ensuring the partners' adherence to legal requirements. The chosen partner must reside in India and be a natural person, not a business or another LLP.

File an annual statement of accounts and solvency: LLPs are required to submit an annual statement of accounts and solvency to the ROC in accordance with the LLP compliance requirements. This statement must be submitted within ninety days of the LLP's fiscal year's conclusion. Information from the LLP's accounting record, profit and loss account, and statement of cash flows for the year must be included. 

Pro tip: LLPs are required to remit annual fees to the ROC on time, late fee can attract fines.