What Is A Limited Liability Partnership?

The Limited Liability Partnerships in India are governed by the Limited liability Partnership Act, 2008. It requires a minimum of two partners to start an LLP and at least one of them has to be a resident of India. There is no limit to the maximum number of partners to this agreement. Individuals, as well as, Body Corporates can be a member of an LLP. It is formed as a distinguished legal entity. The liability of partners under this partnership is restricted by their contribution to the partnership, in case of any loss or damage caused, the partners would not be personally liable, their responsibility would be limited to the contributions made by them. 

• Minimum 2 partners are required for registering an LLP
• At least one partner has to be residing in India
• There no minimum limit for capital 
• The company should be engaged in lawful business, a business that is not against public interest or is prohibited under the Law
• The company should have a name that is not similar to the existing ones.

List of Documents required for the Registration

• Passport size photographs of the partners
• PAN card of all partners
• Id Proof of each partner (Passport, Aadhar Card, Driving License or Voter ID Card)
• Copy of utility bills of all partners with present address
• Registered address proof of the office– Electricity bill along with rent agreement (in case of rented property) / ownership proof of registered office.
• Utility bills of the business place (water, gas and electricity bills)
• Stamp paper of LLP Agreement.

What is the procedure for registration?

• Applying for a Digital Signature Certificate  

This is required for e-application while applying for LLP. The partners have to apply for a DSC along with all the Id proofs and address proofs.
 

• Applying for the LLP’s Name

More than one name has to be submitted to the Registrar so that he has a choice to pick a name that is not already registered or similar to the existing companies or trademark. 
 

• Applying for registration certificate of LLP

After the name of the LLP has been approved and the DSC is acquired the partners have to file for the Incorporation of the LLP with the Ministry of Corporate affairs by paying the prescribed fees, the registrar issues the certificate of incorporation once he is satisfied that all the requirements are met with. This document has to be attested by one of the following people:
 

1. An Advocate of Supreme Court
2. An Advocate of the High Court 
3. A Chartered Accountant working in India
4. Any person who has been designated as a Director, Manager or Secretary in the Articles of Association.

• Obtaining subscribers for the company

A company must have subscribers who have signed their names and submitted their occupation, number of shares subscribed and the nature of shares, etc. and must duly sign the Articles of Association and Memorandum of Association.
 

• Obtaining Certificate of Incorporation

After the above process is complete and the necessary fees is paid the Certificate, the registrar issues Certificate of Incorporation upon which the company’s registration process is complete.

What are the advantages of registration?
 

• No Limitation on Capital – The LLPs can start with any amount of capital. There is no limitation as to minimum or maximum requirements for capital unlike a Private or Public company.
• Registration Costs – The cost of registration for an LLP is very reasonable when compared to the registration of any other form of company. The partners can have a registered company for lower costs which would enable them to take recourse to legal remedies in case of any issues.
• Tax Benefits – LLP is not susceptible to any tax on the income and share of its partner. There is no dividend distribution tax that is payable under section 40(b).  The partners can withdraw profits from the company, and no additional tax liability in the form of DDT is would be payable by them, but, for a company, if the owners withdraw the profits, they have to pay DDT @ 15%.  Therefore, the profits of an LLP are in the hands of the partners and they can be withdrawn by the partners at their convenience.
• Low Compliance - The LLP has a lesser compliance burden. Where a company has to submit 8-10 statements a year, an LLP has just 2 statements i.e Annual Return & Statement of Accounts and Solvency.