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LLP Registration Process in India – 5 Steps Simplified Guide

Do You Want To Start An LLP ( Limited Liability Partnership )

· Company Registration,LLP Registration
limited liability partnership registration

One of the most distinct and preferred forms of business in India is a Limited Liability Partnership or commonly known as LLP. An LLP has the features of both a Partnership Firm and a Private Limited Company and is registered under the Limited Liability Partnership Act, 2008. An LLP is relatively a new form of business and is preferred by people who wish to form a Partnership, but limit their liability. Being a hybrid business structure, an LLP comes with various benefits.

Unlimited Members

The minimum number of people required to start an LLP is 2, but there is no limit as to the maximum number of partners in a Limited Liability Partnership. Unlike a Private Limited Company, which can only have a maximum of 200 members, an LLP can have as many members as it wants.

No Minimum Investment

A Limited Liability Partnership registration can be done with only a small amount of capital as there is no requirement of minimum capital investment. The partners’ investment may also not be in monetary form and they can invest in the LLP their movable, immovable, tangible or intangible property.

Easier ROC Annual Compliances

The ROC annual compliances of an LLP are simple and do not mandatorily require an audit of accounts. A Limited Liability Partnership is required to get a Tax Audit only the following cases:

  • The annual turnover of the LLP is more than INR 40 lakhs
  • The total contribution of the Limited Liability Partnership is more than INR 25 lakhs.

Easier Taxation Compliances

The taxation of an LLP is easy as the LLP is not liable to file ITR returns and the share of the designated partners is not subject to tax. The other tax benefits applicable to an LLP in India are as follows:

  • No Dividend Distribution Tax
  • No Deemed Dividend
  • Deductions allowed to an LLP in form of the Interest to partners, salaries paid, commission paid, bonus paid, and remuneration paid.

Easy And Affordable LLP Registration

The LLP registration process is easier as compared to a company incorporation process as the formalities are straightforward and can be completed in 10-15 days. Limited Liability Partnership registration also needs less investment as the registration costs are lower than a company registration.

In addition to these LLP benefits, there are various disadvantages that come with Limited Liability Partnership registration as well.

5 Steps Simplified Guide for LLP Incorporation

LLP Registration Procedure in India

Step 1: Procure Digital Signature Certificate

Every form or application is filed online with the MCA, which requires to be signed digitally by the applicants and partners of the LLP. Therefore, the DSC with validity of 2 years is procured for the Designated Partners of the Limited Liability Partnership. The DSC is associated with the PAN card of the application. It further requires passport size photograph and address proof.

Step 2: Reserve LLP Name

  • The new process requires the applicants to file the web form named RUN-LLP (Reserve Unique Name – Limited Liability Partnership). The similar web form – RUN is already deployed to secure company’s name. RUN-LLP has replaced the old form LLP Form 1. The new form has been simplified that requires information related to the desired name, its significance and other basic details.
  • The application can be made with maximum 2 names in preference order providing their significance. The names must comply with the applicable provisions for name reservation. If none of the names is approved by the MCA, another chance is provided to apply two more names.
  • Once the name is allotted for LLP, it is reserved for a period of 90 days from date of approval. The name reservation is followed by below mentioned steps.
  • The major change in the new process is this step and application. Earlier, the incorporation application was supposed to be filed in LLP form 2, which is now replaced with FiLLiP (Form for incorporation of Limited Liability Partnership). The most significant part is integration of DIN Allotment Application with incorporation application. Below mentioned are the features of the application:
  • DPIN/DIN application for maximum 2 Designated Partners (DPs) can be made under the application. If there are more than 2 DPs who do not hold DIN, they can be added later by following respective filings.
  • With this form, the application for name reservation can also be made. However, that is kept at the option of the applicants. The applicants can either choose to reserve name through LLP-RUN or under this form.
  • The application is accompanied with required documents including the subscriber’s sheet and registered office address proof. The e-form will be attested by the partners through PAN based DSC and certified by the practising professional (CA/CS/CWA).
  • The application will be processed for approval by Central Registration Centre (CRC). If the registrar finds it necessary to call for further documents or information, it may do so by directing for re-submission within 15 days. Another opportunity of re-submission maybe provided after re-examination of application, which again has 15 days period. It is provided that the total period for re-submission of documents shall not exceed 20 days in total.
  • Upon approval of the application made for LLP registration online, the Certificate of Incorporation (CoI) will be issued in form 16 along with DPIN/DIN allotted to the Designated Partners. CoI will also consist of the Limited Liability Partnership Identification Number (LLPIN). The date of CoI will be the date of LLP incorporation since when it has come into legal existence. The business can now be commenced in LLP’s name.

Step 4: Apply for PAN and TAN

Unlike the in case of company, the application for PAN and TAN is required to be made separately for LLP through offline or online mode. The applications are made directly to the Income Tax Department and also processed by it. The applications are made in form 49A and 49B respectively with Certificate of Incorporation as supporting proof.

Step 5: Drafting and Filing LLP Agreement

  • The next step will be to draft LLP Agreement carefully and based on the partners’ requirements. Step-4 and Step-5 both can be processed simultaneously, however, this step would take a little longer to complete than simply making the application. The name, business object, place of business and all other essential details of LLP will be placed in the Agreement. Other clauses will be capital, profit sharing ratio, rights and responsibilities of partners, etc.
  • Once the LLP Agreement is reviewed and agreed upon by the partners, it will be executed by payment of stamp duty. The agreement will be executed by payment of stamp duty, which depends on the respective State Stamp Act where the registered office of the LLP is situated. Then with signature by partners and attestation by the witnesses, the agreement will be executed.

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