Overview of LLP Registration

A Limited Liability Partnership (LLP) is a popular business structure for entrepreneurs, as it combines the advantages of both a company and a partnership firm into a single entity. Introduced in India in 2009, LLPs are governed by the Limited Liability Partnership Act, 2008. An LLP requires a minimum of two partners for its registration, but there is no upper limit on the number of partners.

LLPs are easy to manage and register in India. The LLP Agreement outlines the rights, responsibilities, and duties of the partners. One of the key benefits of an LLP is that partners are not liable for the misconduct or negligence of other partners. Instead, they are only responsible for complying with the provisions and regulations set out in the LLP Agreement.

Benefits of LLP Registration in India

The following are the key advantages of registering a Limited Liability Partnership (LLP) in India:

1. Separate Legal Entity
   An LLP is a distinct legal entity, separate from its partners, meaning it can own property, enter into contracts, and carry out business activities independently of its members.

2. Limited Liability
   The liability of each partner is limited to the amount they have contributed to the LLP. This means that, in case the LLP incurs losses or debts, the personal assets of the partners remain protected and are not at risk of being confiscated.

3. Ease of Transferring Ownership
   Transferring ownership in an LLP is simpler compared to a Private Limited Company. The process of adding or removing partners is straightforward and does not require significant changes to the structure of the business.

4. Corporate Status
   As per Section 3 of the LLP Act, 2008, an LLP is considered a corporate body. This grants it the rights and privileges of a corporation while maintaining the flexibility of a partnership.

5. Perpetual Succession
   An LLP enjoys perpetual succession, meaning that the firm's existence is not affected by the entry or exit of partners. The LLP continues to exist even if the partners change.

6. No Minimum Capital Requirement
   An LLP can be established with no minimum capital investment. This makes it easier for entrepreneurs to start a business without the financial burden typically associated with other types of entities.

7. LLP Agreement
   The LLP Agreement is a formal document that outlines the roles, responsibilities, and duties of each partner. It also serves as a guide for decision-making and the operational management of the LLP.

8. No Audit Requirement
   In most cases, LLPs are not required to undergo an audit. However, if the annual turnover exceeds Rs. 40 lakh or the capital contribution exceeds Rs. 25 lakh, an audit will be required.

9. Simplified Registration Process
   LLP registration has been simplified by the Ministry of Corporate Affairs (MCA), with a fully online process for submitting documents and filing forms.

10. Easy to Wind Up
    In comparison to Private Limited Companies, LLPs can be easily wound up. The dissolution process is more straightforward and involves fewer legal formalities.

Minimum Requirements for LLP Registration:

1. At least two Designated Partners

   • One of the designated partners must be a resident Indian citizen.

2. Designated Partner Identification Number (DPIN)

   • All designated partners must hold a valid DPIN.

3. Digital Signature Certificate (DSC)

   • All designated partners must possess a DSC for electronically signing the LLP registration forms.

4. Registered Office Address Proof

   • A valid address proof for the registered office is required.

5. LLP Agreement

   • A formal agreement between the partners outlining the terms of operation.

6. Capital Contribution

   • The amount of capital each partner contributes must be clearly defined.

7. Unique Name

   • The name of the LLP must not be identical or similar to any existing LLP or registered trademark.

Forms Required for LLP Registration:

• RUN-LLP: For reserving the name of the LLP.
• FiLLiP: For incorporating the LLP.
• Form 5: For giving notice regarding a change of name.
• Form 17: For the conversion of a partnership firm to an LLP.
• Form 18: For converting a Public Limited Company into an LLP.

Documents Required for LLP Registration

The following listed documents are required for LLP Registration in India:

• PAN Card, Aadhar Card, Voter ID, Driving License of the Partners;
• Address Proof of the Partners;
• Residence Proof of Partners;
• Latest photographs of all the Partners;
• Passport (if in case any of the Partners is a Foreign National or an NRI);

• Address Proof of the Registered Office;
• Digital Signature Certificate;
• No-Objection from the Landlord whose place has been used as the Registered Office;
• Utility Bill in the form of electricity bill and water tax receipt (not older than two months).

Procedure for LLP Registration in India

The steps involved in registering a Limited Liability Partnership (LLP) in India are outlined below:

1. Obtain DPIN and DSC for LLP

   • Digital Signature Certificate (DSC): At least one designated partner must obtain a DSC to sign the documents digitally.
   • Designated Partner Identification Number (DPIN): All designated partners must have a DPIN, which can be acquired by filing the DIR-3 form.

2. Verification and Name Approval

   • Partners must select a unique name for the LLP.
   • The name must be reserved by filing the LLP-RUN form with the Ministry of Corporate Affairs (MCA).
   • The name will be reserved for 90 days. If the LLP registration process is not completed within this period, the reservation will be canceled.
   • The proposed name must not be identical or similar to an existing LLP name and should not be offensive.
   • A maximum of two name suggestions can be submitted for approval.

3. Incorporation of LLP

   • The registration form FiLLiP (Form for LLP Incorporation) is used for LLP registration. This form must be filed with the Registrar of Companies (ROC) for the state where the LLP's registered office is located.
   • The FiLLiP form is an integrated form that allows applicants to request DPIN allotment for partners who do not have one.
   • The application for the LLP name reservation can also be made via the FiLLiP form.
   • The application can be submitted only by two individuals.

4. Drafting the LLP Agreement

   • After the submission of all necessary documents, the partners must draft an LLP Agreement that outlines the roles, responsibilities, and duties of each partner.
   • This agreement must be filed with the MCA within 30 days of the LLP’s incorporation, using Form 3. The form can be submitted online through the MCA portal or sent to the relevant ROC.

Points to Consider When Selecting a Name for an LLP

Before deciding on a name for the LLP, the following guidelines should be kept in mind:

1. Easy to Remember: The name should be catchy and easy for people to recall.
2. Short and Simple: The name should be concise and straightforward.
3. Unique: Ensure the name is distinctive and not identical to any other registered LLP or trademark.
4. Relevant to Business: The name should be linked to the nature of the business and contribute to building the brand.
5. Respectful: Avoid names that could be offensive to any religion, caste, sex, creed, community, or society.
6. Compliant with Public Policy: The name must align with public policy and not contradict government regulations.
7. Distinct from Existing Names: The name should not resemble the name of any existing LLP or company.
8. Prohibited Words: Avoid using prohibited terms or characters in the name.
9. Regulatory Approvals: If the name includes words like "bank," "finance," "mutual fund," or "insurance," prior approval from authorities like SEBI, RBI, or IRDA is required.

Post-Incorporation LLP Compliances

Once an LLP is incorporated, the following compliance requirements must be fulfilled:

1. Filing of LLP Agreement

   • The LLP agreement must be filed with the MCA within 30 days of incorporation.

2. Apply for PAN and TAN

   • The LLP must apply for PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number).

3. Opening a Bank Account

   • After obtaining PAN, the LLP can open a bank account in the name of the LLP.

Annual Compliance Requirements for an LLP

The following compliances must be adhered to on an annual basis, irrespective of whether the LLP has commenced operations:

1. Statement of Account and Solvency

   • LLPs are required to file a Statement of Account and Solvency each year, confirming the financial standing of the LLP.

2. LLP Annual Return

   • An annual return must be filed, detailing the activities of the LLP for the year.

3. Income Tax Return

   • The LLP must file an Income Tax Return every year, regardless of whether there is any income or not.

By ensuring these procedures and compliances are followed, an LLP can operate smoothly and remain compliant with Indian regulations.

Penalty for Non-Compliance in LLP

Under the LLP Act, 2008, non-compliance with filing requirements attracts penalties. The specific penalties for failing to comply with mandatory filings are as follows:

1. Non-filing of Annual Return (Form 11)

   • As per Section 35 of the LLP Act, 2008, an LLP must file Form 11 (Annual Return) with the Registrar of Companies (ROC) within 60 days of the end of the financial year.
   • In case of failure to file Form 11 within the prescribed timeline, a penalty of ₹100 per day will be levied.

2. Non-filing of Statement of Account and Solvency (Form 8)

   • As per Section 34 of the LLP Act, 2008, an LLP is required to file Form 8 (Statement of Account and Solvency) within 30 days from the end of the financial year.
   • Failure to file Form 8 within the specified period will result in a penalty of ₹100 per day.

3. Non-filing of Income Tax Return (ITR-5)

   • An LLP is required to file its Income Tax Return (ITR-5) annually.
   • Failure to file the ITR on time results in a penalty being imposed on the LLP, which is subject to the provisions under the Income Tax Act.

These penalties are in place to encourage timely compliance with statutory requirements and ensure that LLPs maintain proper filings with the authorities.