Minimum two Partners
No capital requirement
At least one designated partner to be Indian Resident
DPIN for all partners
Filing Application form
Obtaining DSC and DPIN for partners
Verification and Name Approval
Drafting of necessary documents and their Submission with the Concerned Authority
COI and Delivery of Documents
PAN, TAN Card and Bank Account of the LLP Registered
Copy of Pan Card of Partners
Copy of Adhaar/ Election Card of Partners
Passport Size Photographs
Copy of ownership/rented property
Landlord NOC (if Rented)
Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners.
LLP is a partnership firm with additional benefits of a private limited company. One of the best benefits of LLP is that personal assets are safe under LLP but not in the sole proprietorship or partnership firm.
- Separate Legal Entity – A LLP is a legal entity and a juristic person established under the Act. Therefore, a LLP has a wide legal capacity and can own a property and also incur debts. However, the Partners of a LLP have no liability to the creditors of a LLP for the debts of the LLP.
- Uninterrupted Existence – A LLP has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A LLP being a separate legal person, is unaffected by the death or other departure of any Partner. Hence, a LLP continues to be in existence irrespective of the changes in ownership.
- Easy Transferability – The ownership of a LLP can be easily transferred to another person by inducting them as a Partner of the LLP. LLP is a separate legal entity separate from its Partners, so by changing the Partners, the ownership of the LLP can be changed.
- Audit NOT Required – A LLP does not require audit if it’s turnover is less than Rs. 40 lakhs and the capital contribution is less than 25 lakhs. Therefore, LLPs are an ideal form of business for startups and small businesses that are just starting their operations and want to have minimal regulatory compliance related formalities.
- Owning Property – A LLP being an artificial judicial person, can acquire, own, enjoy and sell, property in its name. No Partner can make any claim upon the property of the LLP – so long as the LLP is a going concern.
- Limited Liability – The biggest advantage is Limited Liability, which means the status of being legally responsible only to a limited amount for debts of a LLP. Unlike proprietorships and partnerships, in a LLP the liability of the members in respect of the LLP’s debts is limited. The personal assets of the directors/partners are safe if the firm goes bankrupt.
- Short and Simple
- Not offensive/illegal
No, there is no minimum capital requirement for LLP formation in India.
Designated Partners are the partners who are responsible for the whole conduct of the LLP. They are appointed since incorporation to take care of the LLP’s functioning. Each designated partner is allotted a DPIN which is another name for DIN. Any person including a body corporate can become the designated partner.
No, the audit of LLP is not mandatory. However, it becomes mandatory if the total contribution by partners is more than 25 lakh or the total turnover is more than 40 lakhs.
No, separate office space is not required for LLP registration. You can even register the LLP at your residence i.e. home address.
Every LLP needs to file the following two forms and a Income tax return after the end of the financial year. The forms and the due dates are as follows:
|Form 11 – Annual Return of LLP||It is to be filed within 60 days from the closure of the financial year i.e. 30th May|
|Form 8 – Statement of Account & solvency||It is to be filed within 30 days from the end of six months of the Financial year.|
|Income Tax Return for LLP||It is to be filed by 31st July|
LLP is the modern way of doing partnership business in India and have major advantages over the traditional business:
- LLP offers you limited liability and hence secure your personal assets.
- LLP is a separate legal entity and therefore protect you from any legal claim or any legal cases.
- The name of the LLP shall remain unique and no one will be able to copy the same.
LLP business has many advantages but still has some disadvantages like:
- LLP is subject to audit and other compliances if turnover crosses the 40 lakh limit or capital contribution crosses the 25 lakh mark.
- Penalties under LLP have no maximum limit and hence if you forget to file any form it shall subject to penalty of Rs.100 per day.
- LLP cannot raise funding and hence not preferred for startup who are looking for funding.
Traditional Partnership- It is an old form of business and partnerships are registered under Indian partnership Act, 1932.Traditional partnerships pose a risk of unlimited liability and hence personal assets are not safe. Name of the firm is not secure, anyone can open on the same name.There is no yearly compliance.