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What is an LLP Registration

Posted by Lakshmiaavana on April 20th, 2020

An LLPis a type of business entity where all the partners have limited liabilities. Each partner is only responsible for themselves and not liable for other partners’ negligence. A Limited Liability Partnership in India is most preferred by corporations. 

Features of an LLP

  • LLP is registered with MCA (Ministry of Corporate Affairs)
  • LLP is a body Corporate – It is a body corporate and incorporated under the act, It is a legal entity separate from its partners.
  • Perpetual Succession – Unlike a partnership firm, LLP can also continue its existence even after the death, Insolvency or retirement of one or more partners.
  • Separate Legal Entity – The entity and partners are distinct from each other.
  • Limited Liability – It means the status of being legally responsible, further the liability of each partner is limited to his agreed contribution in the LLP.
  • There has to be at least two partners and no limit on the maximum number of partners. 
  • LLPs are common in Professional business such as Law firms, accounting firms and wealth managers.

What are the privileges of LLP formation?

  • It is convenient
  • It is Organized
  • It operates based on Agreement
  • Easy to Form
  • It has a flexible capital structure
  • No minimum capital required
  • Low registration cost
  • No limit on the owners of the business
  • Compulsory audits are not required
  • Lower compliances
  • Exemption of taxes
  • Dividend Distribution Tax is not applicable
  • Less restriction and compliance
  • Partners have limited liability
  • Separate Legal entity
  • Foreign Direct Investment is smoother.
  • Accounting Services

LLP company registration process

An LLP is a type of business entity where all the partners have limited liabilities. Each partner is only responsible for themselves and not liable for other partners’ negligence. A Limited Liability Partnership is most preferred by corporations.

LLP companies in India areseparate legal entity distinct from its owners. It can enter into a contract and acquire property in its name. LLP form is not just prevailing in India. It is also seen in countries like the United Kingdom, Australia etc.

MINIMUM CRITERIA FOR LLP REGISTRATION

  • Minimum of 2 partners
  • Registered office in India
  • At least one designated partner as an Indian resident in case of involvement of foreign nationals
  • DPIN for all partners
  • DSC for all Partners

PROCESS TO BE FOLLOWED FOR LLP REGISTRATION INDIA

One needs to follow these steps to start an LLP in India.

  • Appoint partners and designated partners
  • Obtaining Digital Signature Certificate (DSC) 
  • Name Application process
  • Prepare all legal documents
  • Filing of documents electronically
  • File Incorporation with ROC 
  • Apply for DPIN
  • Once the incorporation is received, Draft the LLP agreement
  • Filing of LLP Agreement with ROC.
  • Need to apply for PAN & TAN (Manually / online)

Naming Guide for an LLP (Limited Liability Partnership Company) 

As per Companies Act, 2013 and LLP Act, 2008, it is important to choose an acceptable name for the LLP. Here are a few naming guidelines that need to be followed while deciding a name for your LLP company.

Acceptable name

An acceptable name for an LLP has three parts

  • Name part
  • Object part
  • Constitution part

Name Part

According to the Company Act, 2013 or LLP Act, 2008, the name suggested for an LLP has to be unique and acceptable. It cannot be similar to that of any existing company, LLP or trademark in the same industry or field.

 Object Part 

Every company must include an object part in its name which states the nature of the business of the entity. The object part of the name will define the main activity of the company or LLP. For example technology, textile, hospital, motors, construction, information, pharmaceutical etc.

If the object part varies and a similar name exists, the name will be considered as unique. If a company exists with the name YYY Constructions then YYY Technology is considered unique. The suggested name must have a certain amount of relevance and must not be too vague.

Constitution part

The constitution part of the name represents the type of entity.

  • Pvt Ltd Company, Private Limited Company and Private Limited represent Private Limited Companies
  • OPC or One Person Company represent One Person Companies
  • Ltd, Limited or Limited Company represent Limited Companies
  • LLP, Limited Liability Partnership represent Limited Liability Partnership Companies

Conclusion

LLP gives you the flexibility of a partnership firm with a legal structure. An LLP has limited compliances that need to be followed. Being the most preferred entity by corporates, each partner is responsible for themselves and not liable for their fellow partners. To incorporate an LLP, certain LLP e-forms need to be filled and submitted to the MCA.

Also See: Limited Liability, Liability Partnership, Legal Entity, Private Limited, Partnership, Partners, Name

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