Limited liability partnership or LLP is registered with the ministry of corporate affairs. It’s a partnership firm where all the partners have limited liability. The concept of LLP in India started in 2009 after the introduction of LLP act, 2008 which is passed and notified with effect from 31st march 2009. In India a It’s treated just like a partnership firm formed with a limited liability.
Apply for a DPIN (Designated Partner Identification Number)
All of the proposed designated partners should apply for a DPIN in Form DIN-1.
Additional Documents required with DPIN Application
- One passport size photograph of the applicant in .jpeg format.
- Address proof of the applicant (passport copy/driving license/voter ID/telephone bill/electricity bill/bank statement not older then 2 months)
- Photo copy of PAN Card (as identity Proof)
- Annexure to DIN 1 Form (verification of the applicant)
If the applicant is a foreigner or non resident Indian (NRI) then passport copy as identity proof is a must. The passport copy and the address proof (not older than one year) need to notarize by the Indian embassy, foreign public notary.
Apply for a Digital Signature Certificate (DSC)
DSC is required to sign online application forms before processing it to MCA site. One digital signature of any of the proposed partner is required. To know more on DSC please read this Article.
Apply for name availability
You need to apply for your LLP Name approval in e-form 1 with llp.gov.in. You need to apply with one name and up to 6 proposed names in preference of their priority along with their meaning and significance of each word.
While applying for your LLP name approval you need to keep in mind the name availability guidelines as issued by MCA.
After verifying form and additional details your LLP name will be approved or if any correction is required then the application form will be sent back to you for rectification. You need to rectify and resubmit your application form electronically.
Incorporation of your LLP
After getting your Name approved, you need to incorporate your LLP with the same name. To get it incorporated you need to fill up form “e-form 2”
While applying for registration you need to attach address proof and incorporation document and subscription statement.
All the documents should be self attested by any one of the partners and the subscription document should be signed by a professional like chartered accountant or a company secretary.
Certificate of Incorporation
After approval of e-form 2, you will receive form 16 as your incorporation certificate to your mail box and a hard copy will be sent to you by post.
Draft your LLP Agreement
You need to draft your LLP agreement and get is signed by all of your partners in a stamp paper. These agreements should be signed in presence of at least two witnesses and those witnesses should sign in the same stamp paper.
Filling e-form 3 – LLP agreement
You need to file e-form 3 within 30 days of receiving the certificate of incorporation.
If government is satisfied then they will approve your LLP agreement and your LLP incorporation will be over. You can start doing business in the name of your LLP.
If you have an existing partnership firm then that firm also can be converted to LLP by applying through form 17 along with form 2.
You can convert your private limited company or public limited company to LLP by applying in form 18 along with form 2 for incorporation.
Advantages and disadvantages of forming a Limited Liability Partnership Firm
LLP is a hybrid of company and partnership firm because of both the corporate structure and partnership structure of it. LLP structure is available in other countries like UK, USA, Gulf countries, China, Japan, Australia and Singapore etc. With the introduction of Limited liability partnership act 2008 LLP came in to existence in India.
Followings are the advantage and disadvantage of forming a LLP;
- No partners will be liable on account of the independent or unauthorized action of other partners.
- LLP will be treated as a separate legal entity which will be different from its partners.
- LLP can be merged or amalgamated with another LLP.
- One can convert the partnership form, Private limited company or public limited company to LLP.
- All the filling related to LLP will be in electronic mode
- LLP will continue its business irrespective of change in partners.
- Less restriction and compliance as compared to a private limited company.
- LLP can not get listed in a stock exchange.
- More compliance as compare to a traditional partnership firm.
- It will be taxable in India as a partnership firm not as a company.
- The accounts of the LLP should be audited in accordance to rule 24 of LLP, Rule 2009.
- LLP need to file there annual accounts with MCA in form 11 within 60 days of closer of financial year.
- If any information is required by the registrar then that need to be produced before them.
While filling Income tax return for a LLP a designated can sign and file the return on behalf of the limited liability partnership firm. If the designated partner is not available then it can be done by any other partner.