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Limited Liability Partnership (LLP) combines the benefits of a partnership with that of a limited liability company. In India, it took shape after January 2009 and was an instant success with startups and professional services. The idea behind LLP was to provide a form of business that is easy to maintain and to help owners by providing them with limited liability.
Here are the major reasons why people prefer the structure of an LLP for their business structure:
Limited Liability
The members of an LLP are only liable for a small amount of debt incurred by it. On the other hand, for proprietorships and partnerships, the personal assets of directors and partners are not protected if the business goes bankrupt.
Separate Legal Entity
An LLP is a separate legal entity from the partners in it. It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. The terms of dissolution have to be mutually agreed upon for the firm to dissolve.
Flexible Agreement
Transferring the ownership of an LLP is also simple. A person can easily be inducted as a designated partner and the ownership switches to them.
Suitable For Small Business
LLPs having a capital amount less than ₹25 lakhs and turnover below ₹40 lakhs per year do not require any formal audits. This makes registering as an LLP beneficial for small businesses and startups.
To register an LLP you need scanned copies of the following documents:
From partners:
Note: One partner must self-attest the first three documents. In the case of foreign nationals or NRIs, all the documents must be notarized (if currently in India or a non-commonwealth country) or apostilled (if from a commonwealth country).
For the registered office:
You can register LLP online through Parekh Consultancy. While we make LLP registration a simple 3-step process for you, the actual registration process is elaborate and is explained below for your knowledge:
Step 1: Obtaining DSC And DIN
All the forms that need to be submitted online require the directors’ DSC. So, the first step in the process is to get DSCs and DINs for 2 partners. We collect the necessary information from you and file for them.
Step 2: Application For Name Approval
Simultaneously, we check if the name you want to register under is available and reserve it for your LLP. You can check for name availability in the MCA portal.
The approval of the name will be made by the registrar only if the central government does not deem it undesirable. The name should not hold any resemblance to any of the existing partnership firms, LLPs, trademarks, or body corporates.
Step 3: LLP Agreement
The next step is to draft the LLP agreement and other documents for registration. An LLP agreement is very crucial in a limited liability partnership as it determines the mutual rights and duties amongst the partners, and between the LLP and the partners. Thus, our experts take utmost care in drafting this agreement.
The partners enter into the LLP agreement upon registering the LLP by filing Form 3 online on the MCA portal. This procedure has to be done within 30 days of the date of incorporation.
Step 4: LLP Incorporation Certificate
Our team will file the necessary forms and documents with the registrar. Once the registrar approves all the forms and documents, you get your LLP incorporation certificate and are almost set for running your business.
Step 5: Apply for Your PAN, TAN, & Bank Account
As soon as you get the incorporation certificate, we will apply for the PAN, TAN, and bank account for your LLP.