Limited Liability Partnership is a separate legal entity, carrying the benefits of the conventional sole proprietorship with the perks of the company. It is regulated under the Limited Liability Partnership Act, 2008. LLP registration is a preferable option for its cheaper incorporation in comparison to Private limited companies and fewer tax compliances. In the short time, it has grown, LLP has surely become one of the most popular choices for new businesses.
In this article, we will read in detail what is limited liability partnership, LLP registration in Mumbai, LLP registration documents and LLP registration process.
Limited Liability Partnership was launched in India in 2008 with the objective of creating a favorable and affordable business opportunity for Micro, Small and Medium business enterprises. The most significant benefit of an LLP registration is that one partner is not liable for another partner’s misconduct or negligence.
In the case of default or the company going solvent, the partners are not liable to sell off their assets to fulfil the debt. Under the LLP Act, the rights and functionalities of the partners are regulated under the agreement. A minimum of two partners, one of whom should necessarily be a resident of India, are required to incorporate an LLP.
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In a Limited Liability Partnership, the liability of partners is limited to the extent of capital contributed by them to the firm. Moreover, if a partner becomes insolvent and/or the LLP is winding up, partners are not liable to pay off the debts by selling their personal assets.
LLP agreement clearly specifies the operating structure of the LLP including the rights and duties of the partners. It also provides for a ‘Designated Member’ who looks after the day-to-day operations of the company.
LLP registration creates a new and independent legal identity for the firm. Regulated by the LLP Act, 2008, an LLP can choose to own assets, borrow funds, take legal action and contact other entities in its own name. It has a perpetual existence and is not liable to dissolve in case of partners’ solvency, unlike partnerships.
The key benefit of the LLP registration process is that there are fewer compliance requirements. It is not liable to have a mandatory audit unless the business meets a specific turnover requirement. Unlike companies, board meetings, statutory audits, AGMs, etc. do not apply to LLPs. Professional services, too, are cheaper in the case of LLPs.
As mentioned earlier, the cost of incorporation for a Limited Liability Partnership is lesser than that of a Company. Thus, it is a preferred choice for professionals who are willing to start their business at low costs.
An LLP registration can be done with or without minimum capital. The LLP Agreement does not specify minimum capital contribution at the time of incorporation.
Following steps are to be followed for doing LLP registration in Mumbai:
Prior to the LLP registration process, one must enrol for the Digital Signature Certificate (DSC) of the designated partners of the proposed LLP. This is done because all the LLP registration documents are required to be digitally signed.
After obtaining the DSC, one must file for the Director Identification Number (DIN) and Designated Partners Identification Number (DPIN) within 5 to 7 working days. The application for DIN is to be filed in Form DIR-3. Along with the forms, scanned copies of partners’ identity proofs (Aadhar card and PAN card) are required to be attached. This form is generally filed by a CS in practice.
LLP-RUN is filed for the approval of the name of the proposed LLP. This is processed by the Central Registration Centre (CRC) under Non-STP. It is recommended to use the free name search facility on the MCA portal to select names that are not similar to the existing ones. The provision is to apply for two proposed names of an LLP registration.
Further, an LLP is required to draft and submit the relevant documents such as the MoA (Memorandum of Association) and AoA (Articles of Association) to be registered with the MCA.
FiLLiP (Form for incorporation of Limited Liability Partnership) is used for incorporating LLP. It is to be registered with the Registrar of the state. After this, you receive the ‘Certificate of Incorporation’.
LLP agreement is to be filed on the MCA portal through Form 3 within 30 days from the date of incorporation. Please note that the LLP agreement is to be made on the stamp paper.
8. DSC of partners
Note: In case of NRIs, all documents should be notarized or apostilled.
Ideally, an LLP registration from obtaining the DSC to filing Form 3 takes 18-20 working days, subject to change as per the response from the ROC department.
The process of LLP Registration in India is refashioned by the Ministry of Corporate Affairs. A speedy process of LLP registration was made available on October 2 2018 as a part of the Ease of Doing Business initiative by the central government. Our experts at Taxzona have helped hundreds of entrepreneurs with the LLP registration process in Mumbai. Let us manage your business compliances while you do what you do best. For any questions and queries, feel free to revert to us:
info@taxzona.in
+919820444477
Yes, an existing partnership firm may become an LLP registration by following the LLP Act’s clause 58 and schedule II. To convert and incorporate an LLP registration, Form 17 must be submitted alongside Form 2.
Yes, any existing private or unlisted public company may be changed into an LLP registration by following the LLP Act’s clause 58 and schedule III and IV. Form 18 and Form 2 must be submitted with the registrar.
No, the LLP’s name must finish in ‘Limited Liability Partnership’ or ‘LLP registration’. Only ‘Limited Liability Partnership’ must include the word ‘limited’.
Any change in a partner’s name or address must be reported to the LLP registration within fifteen days. The LLP would then be required to notify the Registrar of the change in Form 4 within thirty days.
Yes, it is mandatory to execute and file what is Limited Liability Partnership Agreement in view of Section 2(0) & (q) , 22 and 23 of the Act.
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