Limited Liability Partnership

Benefits

After deciding on your business model, it's important to choose between the Private limited company registration and LLP, by understanding their differences and advantages they provide, so as to choose what's best for your business model.

The most vital reason for registering as LLP is the limited liability. The members of the firm are only liable for a small amount of debt incurred by it. This is entirely different from proprietorship and partnership where the personal assets of directors and partners are not protected if the business becomes bankrupt.

Seperate Legal Entity:

• LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises.
• It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. A term of dissolution has to be mutually agreed on for the firm to dissolve.

Flexible Agreement:

Transferring the ownership of LLP is also simple. A person can quickly be inducted in 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. It makes registering as LLP beneficial for small businesses and startups.
• An LLP can own or acquire property because it is recognized as a juristic person. Partners of LLP cannot claim the property as theirs.

No Owner /manager Distinction:

An LLP has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders. For this reason, VCs do not invest in the LLP structure.

Detailed Processs

we make the process of LLP registration seamless and hassle-free.

• Arrange basic documents of Partners
• Fill in an online form with accurate information
• Apply for Digital Signature and DIN of Partners
• Prepare all legal documents
• Apply to name availability of the proposed LLP
• Verification of all documents and forms by the respective Government dept and authorities
• File Incorporation Docs with ROC
• Get LLP Incorporation Certificate
• Drafting of LLP Agreement
• Filing of LLP Agreement

Step 1: Obtaining DSC And DIN

The first step is to obtain DSC of the desired partners of the Limited Liability Partnership. The reason for this is that all the forms need to be submitted online and require the directors' digital signatures.

The law also requires that all directors file for a DIN number. The application has to be made in Form DIR- 3.

Step 2: Application For Name Approval

This process involves registering the LLP. Before you do this, you would need to see if the name is already taken. You can check on the free search facility on the MCA portal. The registrar only approves LLP names that are not taken before.

The approval of the name will be made by the Registrar only if the Central Government does not deem it undesirable. The name should also not hold any resemblance to any of the existing partnership firms, LLPs, trademarks, or body corporates.

Step 3: LLP Agreement

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. The partners enter into the LLP agreement upon the LLP registration 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

Once the registrar approves your MOA and AOA, you're steps closer to getting your LLP registered. The next step is to get the LLP Incorporation Certificate. You can do by submitting all documents to the registrar. The time frame is between 2- 12 days. Once you get your LLP Incorporation Certificate, you're ready to go.

Step 5: Apply For PAN & TAN & Bank Account

As soon as you get the incorporation certificate, you need to apply for your company PAN & TAN with the NSDL. The cost for this procedure is less than Rs.200 and it takes around three weeks to get done.

Document Required

The method of LLP registration in India does not require much legwork when it comes to documents

To Be Submitted By Partners

• Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
• Scanned copy of Voter's ID/Passport/Driver's License
• Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
• Scanned passport-sized photograph specimen signature (blank document with signature [directors only])

Note: Any one of the partners must self-attest the first three documents. In the case of foreign nationals and NRIs, all the documents must be notarized (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).

Registered Office Proof

• Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
• Scanned copy of Notarized rental agreement in English
• Scanned copy of No-objection certificate from the property owner
• Scanned copy of sale deed/property deed in English (in case of owned property)

Note: Your registered office need not be a commercial space; it can be your residence too.

Check your Firm Qualifies

Starting a business requires certain specific requirements to be fulfilled to be eligible for registering as an LLP.

The normal partnership structure and LLP share the same attributes when it comes to internal management, profit distribution and tax liabilities. But, it offers the partners less financial liability (limited liability).

Any business who has:

• At least two partners are required to form an LLP. There is no limit to the maximum number of partners
• The nomination of a natural person, if a body corporate is a Partner
• No shared capital requirement, though each partner must have an agreed contribution towards it.
• Minimum capital contribution: There is no minimum capital requirement for an LLP (or a company, for that matter). The LLP should have an authorized capital of at least Rs. 1 lakh.
• At least one Designated Partner as an Indian resident
• DPIN for all Partners
• DSC for all the Designated Partners
• Address proof for the office of LLP.
• LLP does not have to be a commercial space. Even a rented home can be the registered office, so long as an NoC is obtained from the landlord.
• With regard to the changes in the FDI regulations dated November 10, 2015, foreign investors are now permitted to have a 100% FDI in the automatic route LLP. The 100% FDI in the LLP is granted to foreign companies who operate in activities or sectors where 100% FDI is considered permissible through the channels of the automatic route. Also, there should not be any performance prerequisites that are linked to FDI. A definite interpretation of the terms such as ' internal accruals' and 'ownership and control' has been provided with reference to the LLP. Thus, Foreign investment is made smoother and quicker with FDI in LLP.
• The LLPs will also be permitted to opt for downstream investment in a different company or even choose LLP in those sectors which allow 100% FDI in accordance with the automatic route. This does not come up with any performance constraints that are FDI linked.

Factors

• The Registrar of Companies (RoC) has issued naming guidelines for LLPs. It is essential that you follow the rules closely or your application may end up getting rejected, leading to a much longer process.
• Unique Component:
• In AlphaBeta Internet Private Limited, AlphaBeta is the unique component. Now, once taken, the name will not be given to any other business in categories related to the Internet.

Blacklist

Abbreviations, adjectives and generic words are rejected. So XYZ would be rejected, as would Good Quality Biscuits. The words bank, exchange and stock exchange, unless approved by RBI or SEBI, would also be rejected.

No Common Trademark:

There should not be a registered trademark by the same name on the IP India website. If there is one, the name can only be approved if you are able to get a No-Objection Certificate from its owner authorising you to use it.

Descriptive Component:

In Biocon Research Private Limited, the word 'Research' describes the business the company is into. You cannot have 'Research' in your name if you're, say, in the logistics or restaurant business.

Check LLP Name Availability

Naming an LLP is often a time-consuming process as the government has put together a complicated procedure with several rules. Furthermore, there are acceptable names for an India LLP, as per the Companies Act, 2013 and LLP Act, 2008. Lucky for you Vakilsearch has built an easy-to-use tool to ensure you're not hassled just for finding a name.