Limited Liability Partnership (LLP)
LLP is a newly emerged form of business partnership where all of the owners will have limited personal liability for the purpose of business in financial obligations terms. Limited Liability Partnership, a type of entity, helps to make the small and medium level of businesses with legal rights. LLP encompasses limited liability with tax benefits and this type of business was introduced in India in 2008. LLP formation is as same as the Private limited company incorporation.
We shall see here the steps of forming a Limited Liability Partnership:
Obtaining Digital Signature Certificate (DSC) for the Partners:
If the LLP partners require DIN, then obtaining DSC is a must. Digital signatures usually have a validity period of one or two years, the same can be used while filling Income Tax Documents or Ministry of Affairs documents online.
DIN for the Partners
The individual who wants to be appointed as a designated partner of an LLP has to proceed with an application for Director Identification Number (DIN). Once the DIN is obtained there is no need for renewals and each one will have only one DIN.
While filling DIN, the following terms to be carefully monitored:
- Prefixes like Mr / Mrs / Ms are not allowed
- It is mandatory to attach the photo in the given area
- PAN card is important for all Indian Nationals.
- For Foreign nationals Passport is important
- Address proof for Indian applicants should be in the name of applicant and should not be older than two months from the date of filling the form for DIN
- Address proof for foreign applicants should not be older than one year from the date of filling the form for DIN
- Application should be signed
- While submitting the online form, a provisional DIN will be generated by the system.
Getting approved with the LLP name by Registrar of Companies (ROC)
Suggesting names for the LLP can be approved quickly by ROC if the LLP Naming Guidelines are followed. Once the application for the reserving name is submitted to MCA, it will be processed by ROC in the State of Incorporation.
An LLP name approval letter will be issued to the proposed partners once the name application approval is accepted. The required incorporation document should be filed within 60 days and get registered with the LLP. If the LLP fails to form within the stipulated time, the LLP name approval might have to be re-obtained.
Soon after accepting the LLP registration, the Certificate of Incorporation will be issued by the Registrar. The LLP Partnership deed should be filled within 30 days with MCA. If the days exceed, LLP would be fined.
Minimum Requirements to form LLP:
- Minimum of 2 designated partners
- Minimum 2 Partners
- One of the designated partners shall be a resident of India
- The partners and designated partners can be the identical persons
- Each partner has to contribute some amount as not as a concept of share capital
- DIN for all partners and DSC for one of the designated partners are required
Advantages in forming LLP:
- Less compliance level
- LLP can easily dissolve or wind up
- No restriction towards maximum number of partners
- Easy to establish, manage and to run
- Act of Partners is not implied on the partners
- LLP can be formed with minimum budget
- No personal asset query about the partners except in case of fraud