First compliances for a newly incorporated Limited Liability Partnership (LLP)

FIRST COMPLIANCES FOR A NEW LIMITED LIABILITY PARTNERSHIP

A newly registered Limited Liability Partnership (LLP) has to complete certain first compliances, preferable within the first 30-60 days of incorporation:

 

1. Execution of the LLP Deed and filing Form 3: The partners have to execute an LLP Deed and file Form 3 with the Registrar of Companies within 30 days of incorporation.

The LLP deed has to be adequately stamped – Stamp duty depends on

• the state/ union territory where the partners have executed the LLP Deed (usually the state of the registered office address of the LLP)

• the initial capital contribution

The LLP Deed is the foundation laying document of any LLP and partners have to carefully draft it. It is the singular most important document for any LLP.

It should reflect the terms and conditions agreed to between the partner on the following points:

1. Name of the LLP, initial address etc.
2. Names of first designated partners
3. Capital contribution and profit sharing ratios of each partner
4. Duties and responsibilities of each partner
5. Powers in each partner and if additional powers are to be vested in a particular partner
6. Indemnity Clauses
7. Calculation of Partners’ Salaries, interest on Capital, interest on Loans etc. (as per the Income Tax Act)
8. Mode of meetings and taking decisions
9. Important future events like admission of partner, dissolution, removal of partners

 

2. Opening a current account with a bank and deposit of initial capital – Once the LLP receives the PAN card, it should immediately open a bank account and the Partners should immediately deposit the agreed initial capital contribution.

Note: One of the questions while filing the annual return of LLP is – Whether the partner has deposited the agree capital contribution?

 

3. Professional Tax Enrollments (PTEC): Unlike GST and Import Export Code (IEC), which can be voluntary and depend on specific business requirements, a PTEC can be mandatory for an LLP in certain states and union territories.

 

4. Other registrations: There can be other state and local level registrations at various level like shop and establishment, labour welfare registrations etc. Usually they depend on certain threshold like number of employees. You can read here

Corporate Compliance Team at Entrecap Business Services has wide experience in incorporating LLPs and completing the initial compliances seamlessly.