Limited Liability Partnership-LLP

Definition of Limited Liability Partnership

  • “Limited Liability Partnership” means a partnership formed and registered as per LLP Act of 2008.
  •  “Partner”, in relation to a limited liability partnership, means any person who becomes a partner in the limited liability partnership in accordance with the limited liability partnership agreement.

Partnership Deed

“Limited liability partnership agreement” means any written agreement between the partners and its partners which determines the mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership.

Benefits of forming a LLP

>> Liability of each partner is limited

>> No requirement of minimum contribution

>> No limit on owners of business

>> Lower registration cost

>> No requirement of compulsory audit

>> Dividend Distribution Tax (DDT) not applicable

>> Less restrictions and compliance of law

Documents for Registering Limited Liability Partnership

Documents of partners

>> PAN card/ ID proof of partners

>> Address proof of partners

>> No objection certificate from land lord

>> Photograph

>> Passport ( in case of foreign nationals )

Documents of limited liability partnership

>> Proof of registered office address

>> Digital signature certificate

Details Required for LLP filing

 General Details:

1. Name and address of the firm and all the partners

2. Nature of business

3. Date of starting of business

4. Capital to be contributed by each partner

5. Profit/loss sharing ratio among the partner

Specific Details :

1. Interest on capital invested, drawings by partners or any loans provided by partners to firm

2. Salaries, commissions or any other amount to be payable to partners

3. Rights of each partner, including additional rights to be enjoyed by the active partners.4Duties and obligations of all partners

4. Adjustments or processes to be followed on account of retirement or death of a partner or dissolution of firm.

5. Other clauses as partners may decide by mutual discussion

LLP Registration Procedure

Step 1 : Application for DIN ( direct identification number )or DPIN ( designated partner identification number )- 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.

Step 2 : Acquire/ Register DSC ( digital signature certificate ) – 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 must be signed by a Chartered Accountant, Company Secretary, Cost Accountant or Advocate.

Step 3 : Reservation of name – Form 1 is filed for the reservation of name of proposed LLP. 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. You need to provide six names in the order of preference in Form 1.

Step 4 : Incorporate a LLP – Form 2 is the application form for the incorporation of the LLP. You must keep in mind following points while filing Form 2.

  • All the details in the form must be filled correctly like – total number of partners and designated partners, amount of partner’s contribution, etc.
  • You have to pay the prescribed registration fee based on the contribution of partners in the proposed LLP.
  • The form must be digitally signed by a person named in the incorporation document as a designated partner having DIN. Also, it has to be digitally signed by an advocate/Company Secretary/Chartered Accountant/Cost Accountant in practice.
  • On the submission of the form, if the registrar is satisfied, they will register the proposed LLP.
  • It takes 15-20 days for the registration of LLP subject to government processing time and submission of necessary documents.

Step 5 : File LLP Agreement – 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.

 

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