LIMITED LIABILITY PARTNERSHIP

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WHAT IS LIMITED LIABILITY PARTNERSHIP (LLP) REGISTRATION?

Limited Liability Partnership (LLP) Registration as the name suggests defines limited liability to its partners. Thus it has features of both, a corporation and a partnership. One partner is responsible for only his own actions and not the actions of his partner. LLPs are governed by Limited Liability Partnership Act(LLP Act), 2008.

Document Checklist

DOCUMENTS REQUIRED FOR LLP REGISTRATION

PAN Card of Directors
PAN card of all partners.
Address proof of all partners.
Utility Bill of the registered office
A No-Objection certificate from the landlord
A copy of the rental agreement.
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FEATURES OF LLP

LLP company is treated like any other partnership firm for taxation purposes
One of the partners in LLP company,must be an Indian
Registrar of Companies registers and controls LLPs in India
No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful business decisions or misconduct.
Liability is limited to each partner agreed upon contribution to the LLP company in India.

Frequently Asked Question

What is an LLP?

A Limited Liabilty Partnership firm (LLP) is a hybrid structure between a partnership firm & a private limited company where the business is carried out in a corporate framework, guided by terms of the mutually adopted partnership deed.

What are the advantages of registering as an LLP over general partnership firms?

Liability- In a general partnership firm, partners are personally liable for debts of the business which means that even their personal property may be used to settle the firm’s debts. Whereas, the liability of partners is limited in case of an LLP.
Immunity against wrong doings of other partners- Under LLP structure, partners are not responsible for negligence or misconduct of other partners whereas in general partnership firms, partners can be held responsible.

Does the Income Tax Act treat partnership firms and LLPs differently?

Both general partnerships and LLPs are taxed at flat rate of 30%.
All the other income tax act provisions apply similarly except that general partnership firms are covered under presumptive taxation scheme i.e if turnover is below Rs. 2 crore in business or Rs. 50 lakh in case of profession, there is no need to maintain books of accounts or get accounts audited whereas, LLPs are explicitly not covered.

What is the minimum capital requirement for LLPs?

There is no minimum capital contribution requirement. It can be registered even with Rs. 100 as total capital contribution.

What is the audit requirement for LLP?

Accounts of an LLP are required to be audited when the turnover is Rs. 40 lakh or more or when the total capital contribution is Rs. 25 lakh or more.
The auditor of an LLP is appointed annually by the designated partners.
The first auditor is appointed before the end of the financial year. Subsequent appointment or reappointment of the auditors is made one month before the closing of the financial year by the designated partners.

Do I need to have any prerequisite documents to start an LLP?

Due to recent changes on MCA portal, incorporation of LLP can only proceed after 2nd October 2018 if any of the partners do not have DIN / DPIN.

My details on my documents have a difference. Can I still incorporate my company using them?

You will need to have exactly the same details on all your documents to incorporate your company.