Limited Liability Partnership

A Limited Liability Partnership (LLP) is a combination of a Partnership Firm and a Private Limited Company in which the owners have a limited liability. It was introduced in India under the Limited Liability Partnership Act, 2008. The primary benefit of incorporating a business as a Limited Liability Partnership is that in an LLP, one partner is not responsible or liable for another partner's misconduct or negligence.

An LLP also provides limited liability protection for the owners from the debts of the LLP. An LLP has a separate legal identity from its members and shareholders and involves lesser compliance requirements as compared to a company. Unlike a Private Limited Company, the partners of an LLP have the right to manage the business directly.

Incorporate A Limited Liability Partnership (LLP)

Documents required for Limited Liability Partnership Incorporation

The documents required to register an LLP include:

  1. PAN card- All Directors
  2. ID Proof (Aadhar card/DL/Voter ID)- All Directors
  3. Permanent address Proof (Bank Passbook-front page/Latest utility bill)- All Directors
  4. Address Proof of proposed Registered Office of company
    1. If taken on rent then NOC with a utility bill from the owner
    2. If not taken on rent or owned by any other entity then NOC signed by the owner
    3. If owned by Director, then sale deed with the electricity bill
  5. Passport size photograph-All directors
  6. Main objects of the proposed company in detail
  7. Four names of the proposed company as per preference
  8. Significance of names of the proposed company
  9. Profitability Ratio (i.e. Contribution by each partner)
  10. Signed LLP agreement & other forms (Format provided)

Process to incorporate an LLP

The process to register a Limited Liability Partnership includes obtaining the Digital Signature Certificate (DSC) & Director Identification Number (DIN), creating and filing of documents with RoC and filing of application for PAN & TAN. It takes around 15-20 days to fulfil all the legal requirements to incorporate an LLP in India, subject to the time taken by government authorities to process the application.

FAQs

How many partners are required for LLP registration?
There must be at least two partners for LLP registration. There is no maximum number of partners in a Limited Liability Partnership.
Who all can become designated partners in LLP?
Any individual, company or LLP can become a partner but only an individual can become a designated partner in a LLP.
Can NRIs or foreign nationals start an LLP in India?
Yes, NRIs and foreign nationals can start LLP in India, provided they submit all the necessary documents after getting them notarised by the concerned authorities. Also, at least one of the designated partners in the LLP should be an Indian national.
How much capital is required for LLP registration?
There is no minimum capital requirement to register an LLP in India. An LLP can be registered with basic deposit in a current account.
Is a separate office space needed for LLP registration in India?
No, a separate office is not needed to register a Limited Liability Partnership. It can be started at the residential address of a partner.
What is Designated Partner Identification Number (DPIN)?
Designated Partnership Identification Number (DPIN) is a unique identification number given to an existing or a potential Partner of any LLP which is incorporated.
What if I have a DIN, do I need a DPIN?
No. With effect 9th July, 2011, if a person already has an existing Director Identification Number (DIN), Designated Partner Identification Number (DPIN) is not required.
What does the LLP Agreement consist of?
An LLP Agreement is entered into by the individual partners of the LLP. It consists of the management policies, policy making strategies, inclusion on new partner, share of partners, on death of an existing partner and such other matters pertaining to administration of the LLP.
Is LLP cheaper to run than a Private Limited Company?
Yes, LLP is cheaper to run than a Private Limited Company, especially in the early start up days. This is because compliances such as audit apply to LLPs only after their turnover is sizeable.
Can an LLP be converted into a Private Limited Company?
No, a Limited Liability Partnership cannot be converted into a Private Limited Company.