What is an LLP.

 

The Limited Liability Partnership Act, 2008 registers all the LLPs  under it. Documents are filed with the registrar to register an LLP. ROC is Registrar of Companies. The Ministry of Corporate Affairs registers all the firms under itself. The suffix added is LLP. But, the brand name can be different from the original name. 2 partners are needed to start an LLP. The  Income Tax taxation is 30% slab for an LLP.

What is an LLP Deed?

A set of statements formed by the agreement of all the partners is called an LLP deed. It consists the share percentage each partner has. And, the investment done by the individuals. Specifically, noting the statistical record of all the investments and percentage share. Share percentage is the amount of share that each partner gets. The share percentage remains same for the profit gained exclusive of the total income of the business. Forming a deed is the first step to building an LLP. As government refers to the deed in case of any dispute amongst the partners.

Alteration of deed is possible later. But, it requires the presence and acceptance of all the owners associated with the firm.

Why Start an LLP?

An LLP is a combination of Partnership firm and Pvt. Ltd. Company. Thus, it enjoys more benefits in a combination of both the businesses. Limited Liability is the biggest advantage. Also, the LLP is a separate entity. And, the partners are free from each-others’ liability. It has moderate number of compliances. While, a Pvt. Ltd. Company has a lot of compliances. Furthermore, there is perpetual succession. Thus, it doesn’t close after the death of any/ all partners. This form has less security issues. For instance, if one of the partners performs misdeed. Then, the other partners won’t be responsible for it. Neither will they have to pay the liability.

There is no minimum requirement of an investment amount to start an LLP.  Moreover, there is no compulsory audit. An Audit is only filed when the turnover goes more than 40 lakhs. Or, the minimum contribution goes more than 25 lakhs. Thus, it is a very efficient type of business. There is no limit for the number of partners in an LLP. Thus, one can have any number of partners.

In short the benefits of an LLP are as follows:

• Limited Liability.
• Moderate Compliances.
• Perpetual Succession.
• No Compulsory Audit.
• No Limit for Partners.

What are the Documents required to start an LLP in India?

For registration of the firm.

PAN Card- PAN card of all the partners.

DIN- DIN is very important. One can use a DIN acquired before as well.

DSC- The Digital Signature Certificate. One can use any Partner’s DIN. Only one is needed.

KYC- KYC of all partners.

Office Proof- A rent agreement is also considerable.      

ROC Forms.   

RUN-LLP- Reserve Unique Name- Limited Liability Partnership.

FiLLiP- Form for Incorporation of Limited Liability Partnership. 

A Certificate of Incorporation is issued by the MCA after the registration is done.

For PAN Card.

A PAN card is issued by the MCA. The PAN card is in the name of the business. It has nothing to do with partners individually.

PAN Card- PAN Card of individual partners.

Certificate of Incorporation.

For Bank Account Opening.

PAN Card- PAN Card of the LLP.

Certificate of Incorporation.

Office Proof- A rental agreement is also enough.

What are the Timelines involved in starting an LLP?

Registration- It is done in 7-10 working days. While, it can also be done online.

PAN Card Registration- It takes 7-10 working days. But, the physical card delivery takes a while.

Bank Account Opening- It takes 7-10 working days as well. But, in some cases it might even take a month.

Summary.

LLP is generally a good form to start a business. It is preferred by the partners who have enough capital requirement to run the business. Thus, the partners are efficient of running the company independently. At the same time, such businesses get loans too. Thus, LLP is a perfect option for the partners if they do not require external funding. However, one is not entertained if looking for equity investment. The costs of registration are low for this business. On the other hand, LLPs have no limit for minimum requirement of contribution. Which is indeed a great advantage. Most of the Digital Marketing Agencies, CA firms and Law firms opt for an LLP business.