Limited Liability Partnership (LLP)
Incorporate Your Limited Liability Partnership (LLP) Hassle-Free with Tax Guider – Start Now!
- Name Approval for your LLP
- 2 Digital Signatures (DSC) with 2 years Validity
- DPIN (Designated Partner Identification Number) for 2 Partners
- Drafting of LLP Agreement
- Incorporation of Your LLP
- Receive your Certificate of Incorporation
- PAN & TAN for the LLP
- Current Account Opening Assistance
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A Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) has become a preferred business structure among entrepreneurs in India. It combines the flexibility and operational benefits of a partnership firm with the limited liability and legal protection of a company.
As the name suggests, an LLP is a partnership firm established by a minimum of two partners who enter into an LLP Agreement to define their roles, responsibilities, and profit-sharing ratios. Unlike traditional partnerships, the liability of the partners in an LLP is limited to their agreed contributions, safeguarding their personal assets.
An LLP also enjoys perpetual succession, similar to a company, ensuring the continuity of the business regardless of changes in partners.
Features of LLP
- Separate Legal Entity:
LLP is a distinct legal entity separate from its partners. - Limited Liability:
Partners’ liability is limited to their agreed contribution. - Perpetual Succession:
LLP continues to exist irrespective of partner changes. - Minimum Partners:
Requires at least two partners with no maximum limit. - No Minimum Capital Requirement:
LLP can be formed with any amount of capital contribution. - Flexible Management:
Operational flexibility is defined in the LLP Agreement. - Ease of Incorporation:
LLPs have a straightforward and cost-effective registration process. - Tax Benefits:
LLPs are exempt from Dividend Distribution Tax (DDT) and MAT. - Profit-Sharing Flexibility:
Partners can customize profit-sharing ratios as per the LLP Agreement. - Low Compliance Requirements:
LLPs have fewer regulatory obligations compared to companies. - Global Acceptance:
LLPs are recognized as credible entities in most jurisdictions.
DOCUMENT REQUIRED
Here’s a comprehensive list of documents required for LLP registration in India:
1. Documents for Partners
Each designated partner must submit the following:
- Identity Proof:
→ PAN Card (mandatory for Indian citizens).
→ Passport (mandatory for foreign nationals). - Address Proof (any one):
→ Aadhaar Card.
→ Voter ID.
→ Passport.
→ Driving License. - Residential Proof (any one):
→ Bank Statement (not older than 2 months).
→ Utility Bill (electricity, water, or gas bill not older than 2 months). - Passport-Sized Photograph:
→ Recent colored passport-sized photograph of each partner.
2. Registered Office Address Proof:
Proof of the official business address of the LLP:
- Ownership Proof (if premises are owned):
→ Property deed or sale deed - Rental Proof (if premises are rented):
→ Rent Agreement.
→ NOC (No Objection Certificate) from the landlord. - Utility Bill:
→ Latest electricity, water, or property tax bill (not older than 2 months). - Utility Bill:
→ Latest electricity, water, or property tax bill (not older than 2 months).
3. Additional Documents (if applicable):
- If any partner is a company or LLP, submit:
→ Board Resolution authorizing the investment in the new LLP.
→ Certificate of Incorporation of the investing entity.
REGISTRATION PROCEDURE
The process to register a Limited Liability Partnership (LLP) in India is straightforward and involves the following steps:
Step 1: Obtain Digital Signature Certificate (DSC)
- All designated partners must obtain a Digital Signature Certificate (DSC) issued by a certifying authority.
- The DSC is required to file electronic forms with the Ministry of Corporate Affairs (MCA).
Step 2: Apply for Director Identification Number (DIN)
- Each designated partner must apply for a Director Identification Number (DIN) using Form DIR-3.
- DIN is a unique identification number required to act as a designated partner in the LLP.
Step 3: Reserve the LLP Name
- File Form RUN-LLP (Reserve Unique Name) with the MCA to reserve a unique name for your LLP.
- Ensure the proposed name complies with the naming guidelines and is not identical to an existing entity or trademark.
Step 4: Draft the LLP Agreement
- Prepare an LLP Agreement, which outlines:
→ Roles and responsibilities of partners.
→ Profit-sharing ratio.
→ Operational framework of the LLP. - The agreement must be finalized and executed post-registration.
Step 5: File Incorporation Application
- Submit the incorporation application through Form FiLLiP (Form for Incorporation of LLP) to the MCA along with:
→ Partner details.
→ Address proof of the LLP’s registered office.
→ Digital copies of supporting documents.
Step 6: Verification and Approval by the Registrar
- The Registrar of Companies (RoC) verifies the submitted documents and application.
- If everything is in order, the RoC issues a Certificate of Incorporation, confirming the LLP’s registration.
Step 7: Apply for PAN and TAN
- After receiving the Certificate of Incorporation, apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the LLP.
Step 8: File the LLP Agreement
- Submit the LLP Agreement to the MCA through Form 3 within 30 days of incorporation.
- This step is mandatory and defines the terms of the partnership.
Compliance after LLP Registration
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Frequently Asked Question
How many partners are required to form an LLP?
What is the liability of partners in an LLP?
Is there a minimum capital requirement to start an LLP?
Can an LLP have foreign nationals as partners?
How is an LLP different from a private limited company?
What are the annual compliance requirements for LLPs?
• Form 11 (Annual Return) with the RoC.
• Form 8 (Statement of Accounts and Solvency).
• Income tax returns.
Can an LLP be converted into a company?
Does an LLP require an audit?
• The LLP’s turnover exceeds ₹40 lakh, or
• The contribution exceeds ₹25 lakh in a financial year.
Can an LLP be closed or dissolved?
What are the tax benefits of an LLP?
• No Dividend Distribution Tax (DDT).
• Exemption from Minimum Alternate Tax (MAT) in certain cases.