Like it? Share it:

Overview of an LLP and guide to LLP Registration

Limited Liability Partnership (LLP) is a relatively new concept in India but has gained wide acceptance due to

  • its inherent flexibility,
  • fewer regulatory restrictions
  • fewer compliance requirements
  • Certain tax advantages.

Earlier, small entrepreneurs/ businessmen looking for a corporate business entity had one choice – private limited Company. However with the coming into force of the LLP Act, 2008 read with the LLP Rules, 2009 , LLP has emerged as a choice – particularly for the service sector and trading business. 

LLP offers the below advantages as compared to a traditional partnership firm:

  • Corporate entity – entity separate from its owners
  • Perpetual succession – will succeed its owner-partners
  • Limited Liability of owners – This is the biggest advantage of an LLP over traditional partnership. Liability, towards vendors and lenders of the owners, in case of business losses is generally limited to business assets and hence, the personal assets of the owners are safe.

 

Process of registration of a Limited Liability Partnership (LLP) is as follows:

01

Reserve name (RuN Form) – valid for 3 months from date of reservation of name

02

Obtain digital signature of the applicant.

03

FiLLiP Form – Form for incorporation – attachments are KYC documents, address proofs, consent letters, subscription sheet

04

Address proof of the partners – bank statement, post paid phone bill , electricity bill or Notarised Rent agreements

05

ID proof of the applicant – passport, driving license, Voter card or Adhar Card

06

Address proof of the LLP is a consent letter from the owner of the place which is to be the registered office address of the LLP

07

If the form, subscription sheet, consent letters and KYC proofs are satisfactory, then certificate of incorporation is issued.

08

Income tax PAN and TAN are issued along with the Certificate of incorporation

09

Within 30 days of incorporation, file LLP Deed in Form 3.
LLP offers the below advantages as compared to a private limited Company:
  • Inherent flexibility in conducting business operations
  • Considerably fewer restrictions like no specific rules for board meetings, general meetings.
  • Considerable lower forms to be filed as compared to Companies like MGT-14, MSME forms, DPT forms.
  • No deposit and loan restrictions as compared to Companies – In present scenario, practically this is the biggest advantage.
  • Considerable narrow scope of Minimum alternate Taxes (MAT) provisions
  • No tax on profit sharing/ distribution as compared to tax on dividends declared by a Company.

 

Mandatory annual compliance for a LLP:
  1. Form 11
  2. Form 8
  3. Income Tax Return
  4. DIR-3 KYC for all designated partners

You can read more about annual compliance here.

The Corporate compliance team at Entrecap Business Services is highly experienced in all matter pertaining to incorporation and compliance (both regular and transactional) of LLP. We shall be glad to offer all services pertaining to Limited Liability Partnerships (LLP) to  Entrepreneurs and businessmen.

Like it? Share it: