Limited Liabillity Partnership

 

Overview

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          The concept of Limited Liability Partnership (LLP) business structure was introduced through a limited Liability partnership act 2008. This is a hybrid form of business structure possessing the perfect blend of the features of companies and the partnership firm assuring multiple benefits to the owners. This form of business structure is most suitable for professionals who desire to indulge in business activity along with limiting their liability.

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Why should I Choose a Limited Liability Partnership?

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• Limited liability- As the legal identity of the LLP is distinct from its member’s liability of the members of LLP is limited to their share only.

• No minimum capital required- There is no such requirement of minimum capital like in the case of the private limited company and public limited company.

• No limit on the number of members- A minimum number of members required for incorporating a partnership is 2 while there is no limit on the maximum number of members. Thus there can be an unlimited number of members in the case of an LLP firm.

• Dividend Distribution Tax (DDT )is not applicable- In the case of other forms of companies, if the owners withdraw profits from the company, additional tax liability in the form of DDT @ 15% (plus surcharge & education cess) is payable by the company. However, no such tax is payable in the case of LLP and profits of an LLP can be easily withdrawn by the partners.

• Less compliance- The compliance requirements of LLP is very less as compared to the other forms of companies.

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What are the Documents Required for Limited Liability Partnership?

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• PAN Card Copy – (Self-attested)

• ID Proof -Voter ID/ Driving License -(Self-attested)

• Address Proof

• Passport size photographs

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What is the Procedure for LLP registration in India?

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Step-1- Acquiring Digital Signature Certificate (DSC):

• In order to validate the documents submitted online, the partners are required to acquire the digital signature certificate.

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Step- 2- Obtaining DIN/DPIN

• Just after getting the digital signature certificate the “Designated Partner Identification Number” for all the proposed designated partners of LLP shall be obtained.

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Step-3- Getting name approval

• Once the DIN and DSC are obtained by the partners an application for obtaining the name approval can be made to the ministry in LLP Form 1. In order to get the name approval in one short, the applicant shall make sure to select the name while taking utmost care that the LLP name guidelines are considered.

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Step-4 -Filing of incorporation forms

• If the registrar of companies is satisfied with the LLP name applied by the partners it will issue a name approval letter to the proposed Partners. The partners shall ensure to file LLP form 2 containing the incorporation documents mentioned above and the subscriber’s sheet within 90 days of receiving approval. In case the partners fail to submit this form within the stipulated time the name approval obtained will lapse and a fresh application for name approval is required to be made. Thus, it is important to submit the documents on time.

• If the registrar is satisfied with the documents filed he will issue a certificate of incorporation and the status of the firm on MCA site will change to approved.

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Step-5- Filing LLP agreement

• To commence the business within 30 days of obtaining the registration, an LLP agreement shall be filed with the registrar in Form 3. In case the partners do not file the LLP agreement on time they may face hefty penalties.