Introduction

As the name suggests, LLP gives the partners running a business limited liability, in simple terms, it means the partners involved in a business have limited liability, no individual partner is liable for the liability and misconduct created by another partner. The Limited Liability Partnership Act, of 2008 governs the rights and duties of the partners, and these partners and responsible for compliance with the provisions of this act. However, this requires LLP registration, and to successfully proceed with the process of LLP Registration, you need to follow step-by-step process.

It is an alternate form of business, which is different from sole proprietorship, partnership and company. LLP gives limited liability to the patterns in a business and also flexibility in the independent decision-making to the partners who are operating a company besides that, it also has a very low compliance cost.

Purpose of an LLP formation

Now that we know how an LLP works or functions, we will be discussing why business choose their LLP mode of registration:-

Avoiding Complexity of a Corporation

LLP generally doesn not have the complexity as that of a private Ltd company, and also has easy and less compliance and protects the partners from liability.

Management Flexibility

There is flexibility in business management of LLP , in decision making as there is not separate management involved to manage the daily affairs, and there are no shareholders or directors like that in a private limited. The decision making is free from unlimited liability i.e protects the personal liability.

Profit Sharing Flexibility

Profit sharing in that of LLP, is easier and better and more structural as that of private limited company, it is direct sharing in profit between the partner as agreed.

No minimum capital requirement

There is no minimum requirement of capital to start an LLP, as compared to that of a corporation business. This is why LLP is preferred by many people.

No effect of change in partnerhsip

There is no effect in change in partnership on an LLP, unlike in corporations or partnership business which has effect of change in its partners.

Separate Legal Entity

It is a separate legal entity, from it partners it can buy, rent and own properties different from that of its partners. Owning and purchasing things in the name of the company for business purposes gives taxing benefits, which is a huge benefit incorporating company as an LLP, it also has perpetual succession which means it refers to the continuous and uninterrupted existence of an organization despite changes in its membership or ownership.

Step-by-step Registration Process of an LLP

Now, after knowing the purpose of forming an LLP, we would know the Registration Process in detail of an LLP:

Obtaining DSC

First and Foremost, all the individuals who want to be appointed as a partner in an LLP must apply for a mandatory Digital Signature Certificate from the MCA Website. This is mandatory for all the documents as they need to be signed digitally.

Now the question that arises is from where is the DSC obtained, it can be obtained from government-authorized agencies The Certifying Authorities grant a license to issue a digital signature certificate by section 24 which is entailed under the Indian IT Act, 2000. Some of such CAs are the National Informatics Center, IDRBT, CDAC, NSDL, etc.

Application for DIN, for the designated partners.

The designated partners must apply Form DIR-3 to receive the Designated Partner Identification Number (DPIN) after receiving the DSC. Proof of identity and proof of residency must be attached by the partner when filing Form DIR-3. All designated partners or those planning to become designated partners in such a proposed LLP shall apply for the DIN. The form requires a scanned copy of the PAN card and Aadhar. A Company Secretary who works for the company full-time or an MD, CEO, CFO, or Director of an already-existing company must sign this form.

Reserving the LLP Name

To incorporate a new LLP or convert an existing company or firm into an LLP, an applicant must obtain a name reserved. An application must be submitted via the MCA Portal to reserve a suggested name.

By submitting Form Reserve Unique Name – LLP, one can make such an application. The Central Registration Center (CRC) approves the name reservation request under Non-STP( Non-STP, in this context, means that the name reservation process does not involve detailed scrutiny or a technical examination at the initial stage. It implies that the name is checked for basic availability and compliance without going through an exhaustive examination process.) after it is submitted. The CRC would send a letter to the applicant informing them of the name reservation request’s outcome.

It is advised to perform a free name search on the MCA Portal to obtain a list of companies with names that are similar to the one you are quoting on the form before entering the company name. This step is beneficial.

Once the name is incorporated, he can begin to apply for the incorporation of the LLP, before the expiration period the LLP needs to be incorporated, expiration period is that of 3 months.

Incorporation of LLP

The member must use the MCA Portal to file an LLP Integrated Incorporation form following the name reservation. The information and documents needed for this FiLLiP (Form for Incorporation of LLP) include the approved or proposed name of the LLP, proof of address for the office registered under the LLP, the activity the LLP will carry out, the DPINs of the designated partners, a subscriber’s sheet with consent, the total contribution by the partners of the LLP with their monetary value, and more. The incorporation document of an LLP is discussed in Section 11 of the LLP Act. The FiLLiP form must be submitted with the specified fee and the stamp Duty indicated on the LLP with a contribution between 1 lakh and 5 lahks, a fee of Rs. 2,000.

Fee for Registration Process of an LLP

The following are the fee structures:

LLP where the partners have contributed between 5 lakhs and 10 lakhs. the fee that is charged is of Rs. 4000
LLP where the partners have contributed more than 10 lakhs, the fee that is charged is Rs. 5000.

Incorporation of the LLP application via e-filling

When the LLP is registered as per the above steps, a Certificate of Incorporation in Form 16 bearing, a seal which is issued by the RoC when the company is being incorporated. Also along with address proof the registered office is also submitted with the application and the said office is under the jurisdiction of the RoC.

After the above, the LLP Identification Number(LLPIN) is on the certificate. The name applied becomes the name of the LLP, the application of allotment of LLPIN is generally submitted by two people, and the name applied for the LLP is examined and approved by concerned authorities, who generally search on the MCA website to check if some other LLP is not registered with the same name. Section 12 of the LLP Act, talks about the guidelines states.

An LLP Agreement essentially lays out the terms and conditions required to handle various issues, such as dispute resolution, partners’ duties and responsibilities, profit and loss sharing, the consequences of a partner’s death, and the admission and removal of partners.

If this agreement was signed before incorporation, the LLP’s partners must approve it following registration. Within thirty days of its incorporation following this ratification, Form 3 must be submitted to the RoC.

The LLP shall be subject to the following fee payment:

LLP with a contribution of less than 1 lakh, a fee of Rs. 50.
LLP with contributions between 1 lakh and 5 lakh, fee of Rs. 100.
LLP with contributions between 5 lakh and 10 lakh, fee of Rs. 150.
LLP with a contribution of more than 10 lakh, a fee of Rs. 200.

Conclusion

The LLP incorporation requires a lot of attention to detail for the registering process, to establish a very flexible business structure. From finding partners to filling out required documents, finding suitable names and drafting the LLP Agreement, as per the proper terms as agreed upon by the Partners is a very comprehensive process. Hence, careful planning and a proper mindset to comply with the LLP Act, and the proper terms to be drafted in the LLP Agreement is a necessary step for business owners who want to incorporate their company as an LLP.

FAQs

How to form an LLP in India?

An LLP is formed by submitting the documents as per the requirements on the MCA website.

What are the documents needed for LLP registration?

Identity proof of the partners along with proof of residence of the office and the LLP Agreement.

Minimum capital needed for LLP registration?

Unlike that of a private limited company, LLP does not need any minimum capital.

If a person is a foreigner, be made a partner in an Indian LLP?

Yes, he can be made a partner in the LLP, as per the LLP Act, there must be two minimum partners to successfully incorporate an LLP in India, but it is only compulsory for one of them, as per the law to be Indian National and that Indian National, must have the eligibility to incorporate an LLP in India. Hence, the other one may be a foreign national.

Eligibility to incorporate an LLP in India?

The person must be an Indian national, he must not be of unsound mind and is not disqualified under any law.

Time taken to register an LLP?

It typically days 15-20 days to register an LLP, but it may vary depending upon application-to-application.

Is the LLP Agreement Mandatory?

An LLP Agreement discusses the roles, functions and duties of the partners hence it is a mandatory document for registration of LLP.

Can the LLP name be changed after registration?

Yes, the LLP name may be changed with approval from the MCA.

Business Registration

NGO

COMPLIANCES

Change In Business

BIS & CDSCO

Government Registration

FSSAI

Environmental

Process of LLP Registration

Aaryan Mishra

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