WHAT IS LLP (LIMITED LIABILITY PARTNERSHIP)

A Limited Liability Partnership means a partnership that has been formed and registered under The Limited Liability Partnership Act, 2008. It is a combination of both partnership and corporation and has features of both these forms of businesses. As the name suggests partners shall have limited liability in the firm which means that personal assets of the partners cannot be used for paying off the debts of the firm. In simple words, LLP is a Body Corporate and a Legal Entity separate from its Partners. It shall have at least 2 Partners with no limit on a maximum number of partners.

PARTNERS IN LLP

There are 2 types of partners in LLP:

• A Designated Partner for looking after the day to day business
• A simple partner who contributes money/know how or any investment in Kinds and thus is like a; sleeping partner;
• A body corporate (through its authorized representative) is also allowed to become a partner in LLP.
• Now a person who is of unsound mind or is adjudged insolvent or if against him any application for adjudication is pending then that person cannot become a partner.

CONCEPT OF DESIGNATED PARTNER

A Limited Liability Partnership shall have at least 2 Designated Partners who shall be individuals and will be held accountable for regulatory and legal compliances, besides their liability as partners. They in simple words are given such designation as they will look after the day to day business of the Firm.

Notable Points:

• All the Designated Partners shall have “Designated Partner’s Identification Number” (DPIN) on the lines similar to "Director's Identification Number" (DIN) required in the case of Directors of the Companies.
• At least 1 of the Designated Partner shall be a Resident Indian.
• In case if all the partners are Body Corporate then nominees of such bodies corporate shall act as Designated Partners.

FEATURES/CHARACTERISTICS OF LLP

• It has a separate legal entity. It exhibits certain features of partnership as well as company.
• Liability of the members of LLP is limited to the amount they have contributed.
• LLP and its members are taxed on the basis of their share of income separately.
• Designated members of LLP have responsibilities similar to that of those duties that is carried by directors and Company Secretary for Companies.

STEPS FOR REGISTRATION

(Step 1) Reservation of Name

• The first and foremost step for the registration of a Limited Liability Partnership is started by applying a suitable name for the Firm. Name can be applied online through web service available at www.mca.gov.in by using RUN-LLP (Reserve Unique Name-LLP) service.
• The Name should not too nearly resemble or be similar to the name already registered as a Company, LLP or Registered Trademark and such words or symbols which are prohibited by Central Government should not be used.
• Fees for reserving the Name of LLP is Rs.200.
• It takes about 1 to 2 working days for getting the name reserved.

(Step 2) Obtaining Digital Signature Certificate (DSC)

Before initiating the process of registration, we have to apply for the digital signature of the Designated Partners of the proposed LLP. This is because all the documents for incorporating an LLP are to be filed online and are required to be signed digitally by using that digital signature only.

(Step 3) Preparing Form FiLLiP (Form for Incorporation of Limited Liability Partnership)

• It’s an E-Form which is available on the website of Ministry of Corporate Affairs or directly through this link : E Form
• For the completion of this e-form one would require the following information:
  •SRN (Service Request Number) of the above-Reserved name. • Address of Registered Office of the LLP • A valid E-mail ID and Phone No. of the LLP • A description of the business activities which are to be carried out by the LLP on incorporation • Details of all the Designated Partners like their DIN (if any), Present Address, E-mail ID, Phone no., Educational Qualification, Monetary Contribution, etc. • The total monetary value of the contribution by partners in the LLP
• The form needs to be signed digitally by the Designated Partner and any 1 of the following Professionals being:
  • An Advocate • Cost Accountant in whole-time practice • Chartered Accountant in whole-time practice • Company Secretary in whole-time practice

After preparation and filing of the E- Form FiLLiP the Registrar issues the LLP Registration Number

(Step 5) Preparation of LLP – Agreement-

• This agreement will include all the bye-laws and all the other internal rules and regulations of the Limited Liability Partnership.
• This agreement is the same as the Partnership Agreement prepared for registration of a Partnership Firm
• It shall be properly Stamped, Signed and Notarized by a Notary Officer.

(Step 6)  The above LLP Agreement has to be attached in E-Form 3 which can be downloaded from the following link:E-Form 3

(Step 7) Filing of E-Form 3-

This form needs to be prepared (along with attachment being LLP - Agreement) and filed with the Registrar within 30 days of receiving the LLP Registration Number.

Documents required as an attachment for the completion of e-form FiLLiP

• Proof of Registered Office Address (utility bill, rent agreement, etc.)
• No objection Certificate from the person who owns the above-registered office (if required)
• Bank Statement / Electricity Bill / Mobile Bill / Telephone Bill – as Residential Proof of all the Designated Partners
• Voter ID Card / Driving License / Passport – as a Proof of Identity of all the Designated Partners 
• PAN Card of all the Designated Partners
• Details of Companies or other LLP's in which the above-Designated Partners are Directors or Designated Partners (Very Important Information)
• A Subscribers Sheet has to be prepared wherein all the Partners, as well as Designated Partners, put in their details along with their Signature in the presence of one Witness.
• Consent of all the Designated Partners has to be obtained in Form 9 and should be properly dated and signed.
• If any partner is a body corporate, a certified true copy of the resolution should be passed in a meeting of such body corporate. Such resolution needs to be printed on a letterhead of such body corporate along with the name and address of an individual who will be a nominee/designated partner on its behalf will be required.
• In case LLP is into any business which requires prior approval of any particular Regulatory Authority, then a copy of such approval is also needed to be attached.
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BENEFITS OF LLP REGISTRATION:

Following are the advantages of incorporating an LLP:

• No Minimum Capital Required: Unlike companies, LLP can be registered with any least possible capital.
• No restriction on maximum member: LLP required minimum 2 partners but there is no limit or conditions for maximum members.
• Cost of registration: LLP can be registered with very minimum government fees.
• Lower Compliances Cost: Half yearly compliances of LLP are of very minimum cost.
• An Audit is not Mandatory until if the Turnover exceeds 40 Lakhs or Contribution of Partners exceeds 25 Lakhs