In India, the concept of Limited Liability Partnership was introduced in 2008 by the LLP Act, 2008. In India, LLP has become the most preferred form of business among entrepreneurs. Registering an LLP in India has both the limited liability features of a Private Company and the flexibility of a Partnership Firm. No partner is answerable on account of unauthorized or illegal actions of other partners, thus individual partners are protected from joint liability created by another partner's wrongdoing. LLP is generally preferred by professionals and micro and small businesses that are family-owned or closely held. In 2022, the MCA (Ministry of Corporate Affairs) introduced LLP (Second Amendment) Rules, 2022 and it has made the procedure of LLP Registration even easier & transparent as now all the LLP Forms will be digital-based. Also, with the LLP (Second Amendment) Rules, 2022, Limited Liability Partnerships shall be allotted their TAN & PAN along with the Certificate of Incorporation itself.
What is a "Limited Liability Partnership" or "LLP"?
LLP or Limited Liability Partnership has become a popular form of organization among entrepreneurs in India. A Limited Liability Partnership gives the benefits of a Company & a Partnership Firm. An LLP in India is a Partnership Firm established by at least 2 Partners who enter into an LLP Agreement. However, the LLP Partner has limited liability and the LLP has perpetual succession just like a Company.
What are the Features of an LLP in India?
The following are the features of an LLP in India:
It's a body corporate & legal entity separate from its members;The members of an LLP have a limited liability, limited to their agreed contribution to the LLP;It has the organizational flexibility of a Partnership;It has a perpetual succession, it continues to exist even after the founding partners leave the organization. All it requires is to have at least 2 partners;Its accounting & filing requirements are similar to that of a Company;Less compliance and regulations;No requirement for minimum capital contribution;At least one partner must be a resident of India;There is no upper limit on the maximum number of Partners.Benefits of LLP Registration in India
The following are the benefits of LLP Registration in India:
1. Low Cost and Less Compliance:
The overall cost of establishing a Limited Liability Partnership is low compared to the cost of registering a Private or Public Limited Company in India. The compliances to be followed by the LLP are also low. The LLP needs to file only 2 Statements yearly (i.e., an Annual Return and a Statement of Accounts and Solvency.
2. Liabilities are limited:
Limited Liability Partnership provides a limited liability benefit to all the designated partners. In case of s business insolvency or loss, the partners' liability is restricted to the capital contribution as per the LLP agreement. Moreover, one partner is not held responsible for the actions of negligence/misconduct of any other partner.
3. Separate Legal Existence:
Just like a Company, an LLP has a separate legal entity. The Limited Liability Partnership is different from its partners. An LLP in India can sue & be sued in its name. The Contracts are signed in the name of the Limited Liability Partnership (LLP) which helps to gain the trust of various stakeholders & gives the customers and suppliers a sense of confidence in the business.
4. Tax Benefits:
It is also exempted from various taxes like DDT (Dividend Distribution Tax) & Minimum Alternative Tax. The tax rate on LLP is less than that of the Company.
5. No Minimum Capital:
For the LLP formation in India, no minimum capital is required. No minimum capital contribution is required from partners. An LLP can be incorporated even with Rs. 2000 as a total capital contribution.
What are the Different Types of LLP Forms in India?
Following is the list of all types of LLP Forms in India:
1. FiLLiP Form: This form is used for the incorporation of LLP in India.
2. Run LLP: This form is used for reserving a name for the LLP.
3. Form 3: Details regarding LLP Agreement.
4. Form 8: Statement of Account & Solvency.
5. Form 11: Annual Return of LLP.
6. Form 24: This is the application to the ROC for striking off the name of LLP.
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LLP Registration
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