Starting a business in India? Need the flexibility of a partnership with the advantages of limited liability? Then, limited liability partnership registration is the ideal option for you. LLPs are gaining popularity among startups and small businesses because of their easy structure and legal protection.
What is an LLP?
An LLP, or limited liability partnership, is a business structure that has elements of a traditional partnership and a private limited company. Partners in an LLP enjoy limited liability, which implies they are not individually responsible for the debts of the firm. It also provides management flexibility and less compliance rules than companies.
Advantages of LLP Registration
Some of the important advantages of LLP registration are:
Limited Liability: Your funds are safe. You’re liable only for what you put into the business.
Separate Legal Identity: LLP is considered a separate legal entity, hence can hold property, enter into contracts, and sue or be sued in its own name.
Low Cost & Compliance: LLPs have less formality and compliance requirements compared to private limited companies.
No Minimum Capital Requirement: You are free to commence an LLP with any capital amount.
Tax Benefits: LLPs are exempt from Dividend Distribution Tax (DDT), and profit-sharing is tax-exempt in the hands of the partners.
Minimum Requirements for LLP Registration
To register an LLP in India, you must satisfy the following conditions:
At least two partners must be there (no limit).
At least one partner has to be an Indian resident.
All partners should possess a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
A registered office address for communication.
Step-by-Step Procedure for LLP Registration
Obtain DSC and DIN: Digital Signature Certificates are needed to sign documents digitally. Apply for a DIN for every designated partner.
Name Approval: Select a distinctive name and obtain approval through the RUN-LLP (Reserve Unique Name) facility on the MCA portal.
Filing Incorporation Documents: Submit the incorporation form (FiLLiP) with required documents and fees.
LLP Agreement: Defines the rights and responsibilities of the partners. To be filed within 30 days of incorporation.
Certificate of Incorporation: After approval, you will get a Certificate of Incorporation from the Registrar.
Documents Required
PAN card of all the partners
Aadhaar card or any document for proof of address
Passport-size photographs
Utility bill (electricity or water) of the registered office
NOC by the owner of the property (if rented)
Draft of LLP agreement
Post-Registration Compliance
Open a current bank account in the LLP’s name.
File annual financial statements and returns.
Keep good books of accounts.
File income tax returns annually.
Non-compliance may attract fines and penalties, so ensuring one is current with all requirements is crucial.
Conclusion
Selecting an LLP is a wise decision for business owners who desire a low-risk and uncomplicated business setup. It has the flexibility of a partnership as well as the security of a company. If you are set to begin your business adventure, start with Limited Liability Partnership Registration and take the first step towards growing your brand with legal confidence.