What is an LLP and How to register an LLP in India?

A Limited Liability Partnership (LLP) is a form of business that offers the combined features of ‘Partnership’ and ‘Limited Company’ business structures. This business form was introduced in India in April 2009 with the enactment of the Limited Liability Partnership Act, 2008. In an LLP, a partner is not responsible or liable for another partner's misconduct or negligence. Instead, all partners have limited liability, limited to their own acts of commission or omission, similar to shareholders’ liabilities in a limited company. However, unlike the shareholders in a company, LLP partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents. The management of the day-to-day business is outlined in the LLP Agreement, providing partners with the freedom to regulate the affairs of the business. LLP registration is administered by the Ministry of Corporate Affairs (MCA) through the Office of the Registrar of Companies. The incorporation process is fully electronic, similar to the company registration process, i.e. applications and documents are filed electronically and the Registrar issues a digitally signed Certificate of Incorporation (COI). https://www.registerkaro.in/llp-registration Why register a Limited Liability Partnership? Registering an LLP offers many benefits with the main benefit being the limited liability of partners. The members of the firm are only liable for a small amount of debt incurred by it. This is entirely different from proprietorship and partnership where the personal assets of directors and partners are not protected if the business becomes bankrupt. Registering an LLP in India offers the following benefits- ​ LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises. It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. A term of dissolution has to be mutually agreed on for the firm to dissolve. Transferring the ownership of LLP is also simple. A person can quickly be inducted in as a designated partner and the ownership switches to them. LLPs having a capital amount less than 25 lakhs and turnover below 40 lakhs per year do not require any Statutory audit unlike a Private Limited Company, where it is mandatory . It makes registering as LLP beneficial for small businesses and startups. A Limited Liability Partnership has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders. For this reason, VCs do not invest in the LLP structure. An LLP can own or acquire property because it is recognized as a juristic person. Partners of LLP cannot claim the property as theirs. BENEFITS OF INCORPORATING AN LLP It is a separate legal entity from its partners. Induction of partner is simple. No requirement of audits for small business. No distinction between owner and partner. Steps to register an LLP in India 1. Obtain DSC and DIN of partners The first step is to obtain the Digital Signature Certificate of the desired partners of the Limited Liability Partnership. The reason for this is that all the forms need to be submitted online and require the directors' digital signatures. The law also requires that all directors file for a DIN number. The application has to be made in Form DIR- 3. 2. Application For Name Approval This process involves registering the LLP. Before you do this, you would need to see if the name is already taken. You can check on the free search facility on the MCA portal. The registrar only approves LLP names that are not taken before. The approval of the name will be made by the Registrar only if the Central Government does not deem it undesirable. The name should also not hold any resemblance to any of the existing partnership firms, LLPs, trademarks, or body corporates. 3. Filing of LLP Incorporation Documents with MCA LLP Registration filing consists of preparation and filing of E-Form FiLLip with MCA with required documents. All the documents executed and attested as per documentation requirements has to be attached to the E-Form FiLLip and has to be digitally signed with the Digital Signature Certificate (DSC) of all the proposed Partners and Designated Partners. 4. LLP Agreement LLP agreement is very crucial in a limited liability partnership as it determines the mutual rights and duties amongst the partners, and between the LLP and the partners. The partners enter into the LLP agreement upon the LLP registration by filing form 3 online on the MCA portal. This procedure has to be done within 30 days of the date of incorporation. 5. Apply For PAN & TAN & Bank Account As soon as you get the incorporation certificate, you need to apply for your company PAN & TAN with the NSDL. The cost for this procedure is less than Rs.200 and it takes around three weeks to get done. What Documents will you need? The below mentioned documents will be required for each Director/ Shareholder: Identity And Address Proof of Partners Copy of PAN Card or Passport (Foreign Nationals & NRIs) Copy of Aadhar Card/ Voter’s ID/ Passport/ Driver’s License Copy of the latest bank statement/telephone or mobile bill/electricity or gas bill Copy of passport-sized photograph specimen signature (blank document with signature [directors only] ) ​ Note: In the case of foreign nationals or NRI's, all documents must be notarized (if currently in India or a non-commonwealth country) or apostilled (if in a commonwealth country). Registered Office Proof Copy of the latest bank statement/telephone or mobile bill/electricity or gas bill Copy of Notarized rental agreement in English Copy of No-objection certificate from the property owner (If registered office is a rented property) Copy of sale deed/property deed in English (in case of owned property) ​​ Note: Your registered office need not be a commercial space; it can be your residence too. The LLP Registration process is completely online, so you don't even have to leave your home to get your entity registered