MEANING

Limited Liability Partnership (LLP) introduced in 2008 is a prominent legal business structure in India having fewer legal compliances, as the name suggests LLP limits the liability of its partners & lends protection from the incompetence or misdeeds of the other partners. LLP is one of the simplest forms of business to incorporate and manage in India.

Also, LLP is less expensive to incorporate and maintain than a Private Limited Company & serves as a better option from a tax perspective.

Due to the simple incorporation procedure and lesser compliance formalities, LLP is preferred by Professionals, Medium and Small businesses. LLPs are incapable of issuing equity shares, It should thus, not be be used for any business that requires raising equity funds during its existence.

REASONS TO OPT FOR A PLC

LIMITED LIABILITY

In a Partnership, partners are personally liable for all their debts, if it is not repaid by the business, the partners would have to sell their personal assets. But in a LLP, only the invested capital in commencing the business would be lost, the personal properties of the partners would be safe.

PERPETUAL SUCCESSION

A LLP is a business entity having perpetual succession that means continued existence until it is legally dissolved or wound up. Having a separate legal identity, LLP is unaffected by the death or removal of any Partner. Thus, a LLP continues to exist irrespective of the changes made in ownership.

EASY TRANSFERABILITY

The ownership can be easily transferred to another person by introduction of a new partner in the LLP. Since it is a separate legal entity, changing the Partners, won’t change the ownership of the LLP.

FEWER LEGAL COMPLIANCES

LLPs are most suitable for startups and small businesses that are commencing their operations and wish to have minimal legal compliance related formalities. It does not require audit if it has turnover less than Rs. 40 lakhs and capital contribution less than Rs.25 lakhs. It thus, has less structural changes than a private limited company.

A private limited partnership offers legal protection to its shareholders but restricts its ownership. It is relatively convenient to manage and run the company with a possibility of expansion for growing companies. Also, it is easy to dissolve and wind up the company.

DOCUMENTS REQUIRED

1. FOR DIRECTORS & SHAREHOLDERS

  • Copy Of PAN OR Passport (For NRI’S)
  • Copy Of Voter’s ID OR Passport OR Driver’s License
  • Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
  • Passport sized photographs
  • Specimen Signatures

2. FOR REGISTERED OFFICE

  • Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
  • Copy Of Notarized Agreement of the rent (English)
  • Copy Of Property owner’s NO-Objection certificate
  • In case of owned property, Sale deed (English)

REGISTRATION PROCEDURE

  • DSC (Digital/E-signature) of the partners & DPIN (Designated Partner Identification Number) can be obtained within 5 to 7 days.
  • Name Approval from any of the maximum six options given by the company to the MCA should ideally be suggestive of the business entity & unique.
  • Incorporation documents should be submitted to the MCA with an application for incorporation. MCA will then approve the application for incorporation of LLP in 10 to 12 days.

The Certificate of Incorporation will be approved at the end of this process.

  • Every LLP requires a registered Permanent Account Number (PAN) and Tax Account Number (TAN).PAN and TAN will then be couriered to the registered office address in 21 working days.
 

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