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Overview

Limited Liability Partnership (LLP) in India

A Limited Liability Partnership (LLP) is a flexible business structure that combines the advantages of both a partnership and a company. Introduced under the Limited Liability Partnership Act, 2008, LLPs offer limited liability protection to partners, meaning personal assets are safeguarded from business liabilities. An LLP operates as a separate legal entity, allowing it to own property, enter into contracts, and sue or be sued independently of its partners. This structure is particularly appealing to small businesses, professionals, and service-based enterprises as it offers operational flexibility with lower compliance requirements than a private limited company.

Why Registration is Important

  1. Asset Protection : Limits personal liability to the extent of contribution, safeguarding partner assets.
  2. Operational Flexibility : Provides freedom to manage business operations with fewer regulatory constraints.
  3. Separate Legal Status : Establishes the LLP as an independent entity, facilitating contracts and property ownership.
  4. Continuity : Ensures business continuity despite changes in partner composition
  5. Tax Benefits : Avoids double taxation; income is only taxed at the business level.


Documents Required

To register an LLP in India, the following documents are generally required

For Indian Nationals

For Registered Office



Procedures

The process of registering a Limited Liability in India involves the following steps:

  • DSC
    Obtain Digital Signature Certificate
    All designated partners must obtain a DSC, which is used to sign documents electronically.
  • DIN
    Obtain Director Identification Number
    Apply for DIN for all designated partners.
  • Name Reservation
    Name Reservation
    File the RUN-LLP (Reserve Unique Name - Limited Liability Partnership) form to reserve a unique name for the LLP.
  • Incorporation Filing
    Incorporation Filing
    After name approval, file the FiLLiP (Form for Incorporation of Limited Liability Partnership) along with the required documents.
  • Agreement
    LLP Agreement
    Draft the LLP agreement and file it within 30 days of incorporation using Form 3.
  • Certificate
    Certificate of Incorporation
    Upon successful verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation, officially establishing the LLP.


Features

Features & Benefits of Limited Liability Partnership (LLP) in India

Limited Liability
Partners are only liable for the amount they have invested.
Prev Next
Separate Legal Entity
The LLP can own property and enter into contracts in its own name.
Prev Next
Perpetual Succession
The LLP continues to exist regardless of changes in partners.
Prev Next
Operational Flexibility
No restrictions on the maximum number of partners.
Prev Next
Minimal Compliance Requirements
Lesser regulatory burden compared to a private limited company.
Prev Next

Limited Liability Partnership (LLP) in India

Tax Advantages
LLPs are taxed as partnerships, avoiding double taxation.
Prev Next
Easy Transfer of Ownership
Partners can be added or removed without affecting the LLP’s operations.
Prev Next
No Audit Requirement
LLPs with a turnover of less than ₹40 lakhs or contribution of less than ₹25 lakhs are not required to audit their accounts.
Prev Next
Profit Distribution Flexibility
Partners can share profits in any ratio agreed upon in the LLP agreement.
Prev Next
Limited Partner Liability Protection
Partners are protected from personal liability for the wrongful acts or misconduct of other partners, safeguarding individual interests.
Prev Next


Comparison between LLP, Private Limited Company And Partnership Firm

Features One Person Company (OPC) Private Limited Company Sole Proprietorship
Legal Status Separate Legal Entity Separate Legal Entity Not a Separate Legal Entity
Liability Limited to the contribution Limited to shares Unlimited
Number of Partners No limit 2-200 (Shareholders) Maximum 20 Partners
Compliance Requirements Moderate High Low
Registration Cost Moderate High Low
Profit Sharing Flexibility Yes As per shareholding Yes
Perpetual Succession Yes Yes No
Audit Requirement Conditional Mandatory Not Required


Frequently Asked Questions

What is the minimum number of partners required to form an LLP?

At least two partners are required to form an LLP.

Can an LLP be converted into a private limited company?

Yes, an LLP can be converted into a private limited company following the prescribed legal process.

Is there any restriction on the number of partners in an LLP?

No, there is no upper limit on the number of partners in an LLP.

Are LLPs required to file annual returns?

Yes, LLPs must file annual returns with the ROC and comply with other statutory requirements.

What is an LLP Agreement?

The LLP Agreement is a legal document that outlines the rights, duties, and obligations of the partners.

Do LLPs have to be audited?

LLPs with a turnover exceeding ₹40 lakhs or a contribution exceeding ₹25 lakhs must have their accounts audited.

Overview

Limited Liability Partnership

A Limited Liability Partnership (LLP) is a flexible business structure that combines the advantages of both a partnership and a company. Introduced under the Limited Liability Partnership Act, 2008, LLPs offer limited liability protection to partners, meaning personal assets are safeguarded from business liabilities. An LLP operates as a separate legal entity, allowing it to own property, enter into contracts, and sue or be sued independently of its partners. This structure is particularly appealing to small businesses, professionals, and service-based enterprises as it offers operational flexibility with lower compliance requirements than a private limited company.

Why Registration is Important

  1. Asset Protection : Limits personal liability to the extent of contribution, safeguarding partner assets.
  2. Operational Flexibility : Provides freedom to manage business operations with fewer regulatory constraints.
  3. Separate Legal Status : Establishes the LLP as an independent entity, facilitating contracts and property ownership.
  4. Continuity : Ensures business continuity despite changes in partner composition
  5. Tax Benefits : Avoids double taxation; income is only taxed at the business level.

Documents Required

To register an LLP in India, the following documents are generally required

For Registered Office

For Registered Office

Procedures

  • DSC
    Obtain Digital Signature Certificate
    All designated partners must obtain a DSC, which is used to sign documents electronically.
  • DIN
    Obtain Director Identification Number
    Apply for DIN for all designated partners.
  • Name Reservation
    Name Reservation
    File the RUN-LLP (Reserve Unique Name - Limited Liability Partnership) form to reserve a unique name for the LLP.
  • Incorporation Filing
    Incorporation Filing
    After name approval, file the FiLLiP (Form for Incorporation of Limited Liability Partnership) along with the required documents.
  • LLP Agreement
    LLP Agreement
    Draft the LLP agreement and file it within 30 days of incorporation using Form 3.
  • Certificate of Incorporation
    Certificate of Incorporation
    Upon successful verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation, officially establishing the LLP.

Features

Features & Benefits of Limited Liability Partnership (LLP) in India

Limited Liability

Partners are only liable for the amount they have invested.

Separate Legal Entity

he LLP can own property and enter into contracts in its own name.

Operational Flexibility

No restrictions on the maximum number of partners.

Minimal Compliance Requirements

Lesser regulatory burden compared to a private limited company.

Tax Advantages

LLPs are taxed as partnerships, avoiding double taxation.

Easy Transfer of Ownership

Partners can be added or removed without affecting the LLP’s operations.

No Audit Requirement

LLPs with a turnover of less than ₹40 lakhs or contribution of less than ₹25 lakhs are not required to audit their accounts.

Profit Distribution Flexibility

Partners can share profits in any ratio agreed upon in the LLP agreement.

Comparison between LLP, Private Limited Company And Partnership Firm

Features One Person Company (OPC) Private Limited Company Sole Proprietorship
Legal Status Separate Legal Entity Separate Legal Entity Not a Separate Legal Entity
Liability Limited to the contribution Limited to shares Unlimited
Number of Partners No limit 2-200 (Shareholders) Maximum 20 Partners
Compliance Requirements Moderate High Low
Registration Cost Moderate High Low
Profit Sharing Flexibility Yes As per shareholding Yes
Perpetual Succession Yes Yes No
Audit Requirement Conditional Mandatory Not Required

Frequently Asked Questions

What is the minimum number of partners required to form an LLP?

At least two partners are required to form an LLP.

Can an LLP be converted into a private limited company?

Yes, an LLP can be converted into a private limited company following the prescribed legal process.

Is there any restriction on the number of partners in an LLP?

No, there is no upper limit on the number of partners in an LLP.

Are LLPs required to file annual returns?

Yes, LLPs must file annual returns with the ROC and comply with other statutory requirements.

What is an LLP Agreement?

The LLP Agreement is a legal document that outlines the rights, duties, and obligations of the partners.

Do LLPs have to be audited?

LLPs with a turnover exceeding ₹40 lakhs or a contribution exceeding ₹25 lakhs must have their accounts audited.

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