Limited Liability Partnership
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What is LLP ?
LLP is a form of partnership that is registered under the Limited Liability Partnership Act, 2008 where liabilities of all the partners are limited to the extent of contribution bought by them. It helps owners to limit their liabilities while enjoying the advantages of a limited company which is an edge over a traditional partnership firm.
No partner is liable on account of unauthorized actions of other partners, thus individual partners can safeguard them from joint liability arising from misconduct of other partners. LLP as an organization is mostly preferred by professionals, micro and small businesses.
LLP - Benefits
Limited Liability Partnership (LLP) is an upgraded form of Partnership, which has limited liability features of a Private Limited Company and the flexibility of a Partnership firm. The maintenance cost of an LLP and simplicity in formation is one of the prime reasons why it has become a preferred choice for entity incorporation. You can easily commence your business by incorporating an LLP and get the combined benefit of a limited company as well as a partnership firm. Read more to know the process, documents required, and fees of LLP.
Separate Legal Entity
An LLP is a separate legal entity from its partners. It is a major advantage that is not available for normal partnerships.
It helps in protecting the personal assets of the owners with limited liability protection.
No Minimum Capital required
An LLP can be formed with the least amount of capital as there is no minimum capital requirement for incorporating an LLP.
Checklist for LLP
There are certain minimum requirements for LLP that need to be met. Here’s the quick checklist:
Documents required for LLP
Passport size photographs of all partners
PAN Card of all Partners
Passport (in case of Foreign Nationals or NRIs)
Driving License or Voter ID
Bank statement (not older than two months)
Electricity Bill or any other utility bill
If it is a rented property, a NOC from the owner of the property is required
How much time is required for registering an LLP?
The LLP formation process takes around 10 working days subject to document verification by the Ministry of Corporate Affairs (MCA).
There are two types of partners in LLP, designated partner and partner. Partners are the person who shares the profit and loss only. When we talk about designated Partners, those person deals in day to day activities to run the LLP and responsible for all compliances that the LLP is liable to file to ROC timely.
The person who subscribes the subscriber sheet at the time of formation of LLP will be considered as partners in LLP. After incorporation, new person can be added as partner as per the clause mentioned in LLP agreement.
As per the clause mentioning in LLP agreement, a person may leave the organization. Supplement deed is required to be formed at the time of any changes in constitution of LLP. Whenever any person ceases to be partner or any changes occurred then have to inform the ROC by filing prescribed forms.
An LLP shall be under obligation to maintain annual financial records revealing accurate and fair vision of its affairs. The statement of account & solvency and annual return is required to be filed to registrar of company.