Introduction
The introduction of the Limited Liability Partnership (LLP) in India was a landmark in the history of business regulations. An LLP is a type of business entity where the partners, who own and manage the business, are not liable for any personal liabilities due to wrongful acts or omissions committed by their fellow partners. This allows them to reap the benefits of having a separate legal entity while limiting their own individual risk. All LLPs have to be registered with the Ministry of Corporate Affairs and must comply with certain eligibility criteria.
Limited Liability Partnership (LLP) – Definition, Benefits & Eligibility Criteria
This article provides a comprehensive overview about getting started with your Limited Liability Partnership (LLP). It covers topics like LLP registration process, LLP start procedure, and eligibility criteria for an LLP. Honest Corporate Services LLP Registration in Hyderabad is the perfect platform to propel your career towards the next level. We will begin by looking at what an LLP is and its benefits before moving on to discuss the process of setting up an LLP. Lastly, we will discuss the eligibility criteria applicable for registering an LLP.
An LLP is basically a partnership between two or more people and/or entities that has some characteristics of both a corporation and a partnership. The foremost advantage of an LLP from traditional partnerships is that it offers limited liability protection to its owners. It enables partners to minimize their own risk while still enjoying the advantages associated with having a separate legal entity such as limited taxes, flexibility in budgeting and accounting procedures etc.
LLP Registration Process:
Registration of an LLP is mandatory before it can start operating as a recognizable legal entity in India. The entire process for registering an LLP involves filling out various forms such as Form 1, Form 2 etc., submitting documents such as partnership deed etc., paying applicable registration fees etc. All these forms need to be completed online at MCA portal provided by Ministry of Corporate Affairs. Additionally, all partners must also obtain director identification numbers (DINs). A partner who does not have DIN needs to apply for it online through MCA portal before applying for registration.
Once all forms and documents are submitted online along with applicable fees, they are reviewed by registrar’s office who gives approval/rejection within 7-15 days depending upon completeness/accuracy of documents submitted. If approved, certificate of incorporation is issued which serves as proof that company has been registered under Companies Act 2013.
LLP Start Procedure:
Once all documents required for registration have been accepted by ROC (Registrar Of Companies), next step would be commencement of business activity or operations which involve allotment PAN/TAN number from Income Tax Department; opening bank account in name of company; obtaining professional/trade license from local body if any; appointing statutory auditors; filing various returns required under Companies Act 2013; keeping regular books records etc., according to requirement.
Eligibility Criteria For An LLC: < br>< br >The following criteria needs to be met before registering your LLPs in India:
- Minimum two persons are required.
- Minimum capital contribution should be Rs 1 lakh.
- .Minimum one partner should be resident Indian citizen.
- .Maximum number of partners should not exceed 200.
Steps Involved in LLP Registration Process
Starting a Limited Liability Partnership (LLP) is an important decision that requires careful consideration. It is essential to understand the steps involved in LLP registration process before going ahead with the formation. The eligibility criteria for LLP must also be taken into account to ensure that the process of setting up an LLP is hassle-free. Therefore, this article aims to provide a comprehensive overview of the steps one needs to take when registering and setting up an LLP.
1. Obtain Digital Signature Certificate (DSC)
The first step for registering a Limited Liability Partnership is obtaining a Digital Signature Certificate (DSC). A DSC acts as an electronic signature which provides validity to all online documents, including those required for LLP registration. It provides security and authenticity to transactions and ensures that no changes can be made once the document has been signed digitally. Once obtained, details of DSC must be provided in the online application form.
2. Obtain Director Identification Number (DIN)
The second step for registering an LLP is obtaining a Director Identification Number (DIN). This number identifies each director authorised to perform any official activities or decisions on behalf of the company. Every director associated with the proposed LLP must obtain this number prior to filing any paperwork with Ministry of Corporate Affairs.
3. Filing of Incorporation Form
Once both DSC and DIN are obtained, it’s time to file incorporation Form-2 with Ministry of Corporate Affairs using their online portal SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus). This form includes details such as proposed name of the company, its registered address, names of directors and partners, type of business activity etc.
4. Drafting & Filing Agreement
After submission of incorporation form 2, you must draft an agreement between all partners containing clauses such as profit sharing ratio between partners, duties & responsibilities assigned to each partner etc. Once drafted, file Form 3 which contains details about incorporations agreement along with other prescribed documents within 30 days.
Necessary Documents Needed for LLP Registration
Before starting a Limited Liability Partnership (LLP), it is essential to have all the necessary documents in place for LLP registration. Depending upon the eligibility criteria for LLP, number of partners, and other factors, one must collect the required documents to register the entity. After registration, an LLP can start its business operations and comply with regulations set by law to protect its rights. In order to understand what documents are essential, let’s look at some of the key points that need attention while registering a Limited Liability Partnership:
- Partnership Deed or Agreement- It is one of the most important documents that need to be prepared before registering an LLP. A partnership deed acts as a blueprint that defines the rights and responsibilities of each partner and also mentions how profits, losses, and liabilities will be distributed among them.
- Eligibility Criteria-Minimum two individuals are required to start a limited liability partnership while maximum partners allowed is restricted to 200. All partners should have PAN card, copies of identity proofs such as passport or voter ID card and address proof. Further, all partners should also provide details about their occupation.
- Memorandum Of Understanding (MOU)-This document describes the understanding between existing partners if there is any change in their relationship or ownership structure in future.
- Identity Proof-Depending upon citizenship status, residence proof needs to be submitted such as passport copy for foreign nationals or Aadhar card/ Voter ID/ Driving License etc. for Indian citizens.
- Address Proof-The registered office address has to be provided along with rental agreement/owner affidavit etc.
Professional & Government Fees Associated with LLP Formation
When considering registering a Limited Liability Partnership (LLP), it is important to understand the professional and government fees associated with it. Honest Corporate Services LLP Registration in Hyderabad is the perfect platform to propel your career towards the next level. To get started with your LLP formation, you need to go through certain eligibility criteria and follow an LLP start procedure which includes both legal and financial aspects.
Here, we will provide a comprehensive overview of the professional and government fees that prospective LLP owners should be aware of before registering their business. The registration fees for an LLP are relatively affordable as compared to other corporate forms of businesses and can be completed online or offline. A fee of INR 5,000 has to be paid to the Ministry of Corporate Affairs (MCA) for registration.
Additionally, a stamp duty is applicable which may vary from state to state but generally ranges from INR 500-15000. Professional fees are also associated with setting up the LLP such as attorney fees, registration charges for any third party services required such as legal advisors or company secretaries etc. This can add up to another 5-10% on top of all other costs associated with registering your business in India.
Conclusion
LLP registration is relatively straightforward since there are only a few eligibility criteria that must be met in order to form one. Generally, you will need at least two partners, along with evidence of residence and identity for each partner. Additionally, you will want to have your business name already chosen before filing your articles of organization with the state. Once that process is complete, you’ll need to draft partnership agreements for all partners and publicly file them. After registering your business, you will need to obtain any necessary licenses or permits for conducting business in your state or local area.