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Limited liability Partnership company registration in India
A Limited Liability Partnership (LLP) is a hybrid business structure that combines the features of both a partnership and a company, offering its partners limited liability protection while maintaining the flexibility of a partnership. In India, the LLP structure was introduced through the Limited Liability Partnership Act, 2008. Registering an LLP involves a specific procedure, documentation, criteria, and offers various advantages.
Name Reservation: Choose a unique and appropriate name for the LLP and submit it for approval to the Ministry of Corporate Affairs (MCA) through the RUN-LLP (Reserve Unique Name - Limited Liability Partnership) form. The name should comply with the naming guidelines set by the MCA.
Incorporation Documents: Once the name is approved, prepare and file the incorporation documents including the LLP Agreement and other required forms. The LLP Agreement defines the mutual rights, duties, and obligations of the partners and should be filed in Form 3.
Filing Incorporation Form: File Form 2 (Incorporation Document and Subscriber's Statement) along with the required documents such as address proof, identity proof, and other declarations.
Obtain Incorporation Certificate: After successful scrutiny of the documents and forms, the Registrar of Companies (RoC) will issue the Certificate of Incorporation, signifying the LLP's legal existence.
Apply for PAN and TAN: Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the LLP.
Minimum Partners: A minimum of two partners are required for LLP registration. There is no maximum limit on the number of partners.
At Least Two Designated Partners: Among the partners, there should be a minimum of two designated partners, and at least one of them should be a resident of India.
Legal Entity: An LLP is considered a separate legal entity from its partners. Thus, partners' liability is limited to their agreed contribution in the LLP.
Advantages of LLP:
Limited Liability: Partners' liability is limited to their agreed contribution, protecting personal assets from business liabilities.
Flexible Management: Partners can manage the LLP directly or appoint designated partners for management, providing flexibility in decision-making.
Perpetual Succession: LLP's existence is unaffected by changes in partners. It continues to exist until it is dissolved as per the provisions of the LLP Act.
Separate Legal Entity: LLP is a distinct legal entity, capable of holding property, entering contracts, and suing or being sued in its own name.
Taxation: LLPs are taxed at the partnership level, avoiding double taxation. Partners report their share of income in their personal tax returns.
Easy Transfer of Ownership: Ownership transfer in LLP can be easily accomplished by inducting new partners or transferring partnership interests.
Annual Compliance: LLPs need to file Annual Returns (Form 11) and Statement of Accounts & Solvency (Form 8) each year with the RoC.
Change in Partners: Any change in partners or designated partners should be intimated to the RoC within the prescribed time.
Statutory Audit: LLPs with a turnover exceeding a specified limit or contribution exceeding a threshold are required to get their accounts audited.
Conversion and Winding Up: LLPs can be converted into companies or dissolved as per the provisions of the LLP Act.
In conclusion, registering an LLP in India involves several steps, including name reservation, filing of incorporation documents, obtaining necessary certificates, and complying with ongoing regulatory requirements. The LLP structure offers advantages such as limited liability, flexibility, and separate legal entity status, making it an attractive option for entrepreneurs seeking to combine the benefits of partnerships and companies.