Limited Liability Partnership (LLP) has become a preferred form of organization among entrepreneurs as it incorporates the benefits of both partnership firms and companies into a single form of organization.
What is a Limited Liability Partnership Firm?
LLPs or Limited Liability Partnership is a type of business structure that offers extra benefits in comparison to a partnership firm. It provides limited liability to its partners at very nominal compliance costs. Moreover, the Partners of the firm can organize their internal structure like a partnership firm.
Benefits of LLP Company
- LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises.
- It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. A term of dissolution has to be mutually agreed on for the firm to dissolve.
Transferring the ownership of LLP is also simple. A person can quickly be inducted in as a designated partner and the ownership switches to them.
- LLPs having a capital amount less than 25 lakhs and turnover below 40 lakhs per year do not require any formal audits. It makes registering as LLP beneficial for small businesses and startups.
- An LLP can own or acquire property because it is recognized as a juristic person. Partners of LLP cannot claim the property as theirs.
An LLP has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders. For this reason, VCs do not invest in the LLP structure.
Features of LLP
- It has a separate legal entity just like companies
- The liability of each partner is limited to the contribution made by partner
- The cost of forming an LLP is low
- Less compliance and regulations
- No requirement of minimum capital contribution
Documents required to register as LLP
Process of Registration as LLP
Before initiating the process of registration, you must apply for the digital signature of the designated partners of the proposed LLP. This is because all the documents for LLP are filed online and are required to be digitally signed.
So, the designated partner must obtain their digital signature certificates from government recognized certifying agencies. The cost of obtaining DSC varies depending upon the certifying agency. Also, you should obtain class 3 category of DSC & let Our expert procure DIN for you.
If you go for Limited Liability Partnership company registration with StartupDart, up to 2 DINs are covered in the plan & there is no need to apply for DIN separately.
You have to apply for the DIN of all the designated partners or those intending to be designated partner of the proposed LLP.
The application for allotment of DIN has to be made in Form DIR-3. You have to attach the scanned copy of documents (usually Aadhaar and PAN) to the form. The form shall be signed by a Company Secretary in full- time employment of the company or by the Managing Director/Director/CEO/CFO of the existing company in which the applicant shall be appointed as a director.
LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is filed for the reservation of name of proposed LLP which shall be processed by the Central Registration Centre under Non-STP. But before quoting the name in the form, it is recommended that you use the free name search facility on MCA portal. The system will provide the list of closely resembling names of existing companies/LLPs based on the search criteria filled up.
This will help you in choosing names not similar to already existing names. The registrar will approve the name only if the name is not undesirable in the opinion of the Central Government and does not resemble any existing partnership firm or an LLP or a body corporate or a trademark. The form RUN-LLP has to be accompanied with fees as per Annexure ‘A’ which may be either approved/rejected by the registrar. A re-submission of the form shall be allowed to be made within 15 days for rectifying the defects. There is a provision to provide for 2 proposed names of the LLP.
- The form used for incorporation is FiLLiP (Form for incorporation of Limited Liability Partnership) which shall be filed with the Registrar who has a jurisdiction over the state in which the registered office of the LLP is situated. The form will be an integrated form.
- Fees as per Annexure ‘A’ shall be paid.
- This form also provides for applying for allotment of DPIN, if an individual who is to be appointed as a designated partner does not have a DPIN or DIN.
- The application for allotment shall be allowed to be made by two individuals only.
- The application for reservation may be made through FiLLiP too.
- If the name that is applied for is approved, then this approved and reserved name shall be filled as the proposed name of the LLP
LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners.
- LLP agreement must be filed in form 3 online on MCA Portal.
- Form 3 for LLP agreement has to be filed within 30 days of the date of incorporation.
- The LLP Agreement has to be printed on Stamp Paper. The value of Stamp Paper is different for every state.