This article will assist the readers in understanding the meaning of LLP and its advantages. Further, it will inform the readers about the process of registration of the limited liability partnership.
Limited Liability Partnership is a new concept introduced in the year 2008 with the motive of reducing the disadvantages associated with partnership firm. One of the main advantages of the LLP firm over the traditional partnership is that in LLP the liability of the members is limited to their share only. Further, this form of business entity is best suited for the professionals like advocates, CA and CS.
Advantages of LLP -
Some of the advantages of limited liability partnership are as follows-
- Limited liability- As the legal identity of the LLP is distinct from its member’s the liability of the members of LLP is limited to their share only.
- No minimum capital required- There is no such requirement of minimum capital like in the case of private limited company and public limited company.
- No limit on the number of members- A minimum number of members required for incorporating a partnership is 2 while there is no limit on the maximum number of members. Thus there can be an unlimited number of members in the case of an LLP firm.
- Dividend Distribution tax (DDT )is not applicable- In the case of other forms of companies, if the owners withdraw profits from the company, an additional tax liability in the form of DDT @ 15% (plus surcharge & education cess) is payable by the company. However, no such tax is payable in the case of LLP and profits of an LLP can be easily withdrawn by the partners.
- Less compliance- The compliance requirements of LLP is very less as compared to the other forms of companies.
Documents required for registering a Limited liability partnership
- Copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Copy of identity proof like Voter's ID/Passport/Driver's License
- Copy of address proof like Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Passport-sized photograph
- Specimen signature (blank document with signature [partners only])
- Registered address proof like copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- In case of rented property a copy of Notarised Rental Agreement.
- Copy of No-objection Certificate from property owner
- In case of owned property copy of Sale Deed/Property Deed.
Process of registration of limited liability partnership -
Step-1 Application for designated partner identification Number
Every designated partner of the LLP shall file electronic Form DIR-3 to obtain a valid DPIN from the ministry of corporate affairs. In case he already possesses a valid Director Identification Number then the same can be utilized as DPIN.
Step-2 Acquire Digital signature certificate
As per information Act 2000, every document that is filed electronically shall be validated by attaching a digital signature certificate. The signatories are required to apply with the ministry of corporate and obtain a valid DSC.
Step-3 New User Registration
In order to file an e-Form or to avail any paid service on LLP portal, the applicant is first required to register itself as a user in the relevant user category, such as registered and business user.
Step-4 Checking the name availability
Further, an application regarding the availability of the proposed name shall be submitted to the ministry of corporate affairs through form INC-1.
Step-5 Filing of the incorporation documents
For obtaining the approval of ROC Form 2 containing the above -mentioned documents along with consent of partners and declaration shall be filed electronically. Also, the prescribed fees based on the total monetary value of the contribution of partners in the proposed LLP shall be paid.
Step-6 Certificate of incorporation
Once the form has been approved by the concerned official of the Ministry, the certificate of the incorporation will get generated and the applicant will receive an email regarding the same. Also, the status of the form will get changed to Approved.
Step-7- Filing of LLP agreement
As soon as the incorporation of LLP has been processed, an initial LLP agreement is to be filed within 30 days of incorporation of LLP. The user has to file the information in Form 3 with regard to Limited Liability Partnership Agreement and changes, if any, made therein.
