15 Doubts You Should Clarify about LLP Registration By Athulya - March 26, 2019 Last Updated at: Jul 06, 2021 11439 15 Doubts You Should Clarify about LLP Registration Registering an LLP requires an Application for Digital signature Certificate, Designated Partner Identification Number, Reservation of name of the LLP and finally Registration of LLP. One can enjoy several benefits by getting registered as a Limited Liability Partnership company (LLP). Thus it is recommended for entrepreneurs and business owners to know the steps and legal issues involved in LLP registration. A Limited Liability Partnership (LLP) is one of the most sought-after forms of business in recent times, as the companies under LLP can enjoy the benefits of both a partnership firm as well as a corporate company. LLPs are taxed at a lower rate as compared to corporate companies. Moreover, LLPs are not liable to pay Dividend Distribution Tax. This way, you are free from paying taxes when distributing the profit among your partners. The LLP incorporation sounds attractive but how much do we actually know about this form of organization? Fifteen important points you need to know before registering your company as an LLP are listed below: Explore our legal help services to protect your intellectual property, secure funding from Venture Capitalists & comply with the many regulations of the MCA information and resources to help you through your end to end business requirement. Register a Company PF Registration MSME Registration Income Tax Return FSSAI registration Trademark Registration ESI Registration ISO certification Patent Filing in India Important things to know about an LLP: Here are 15 important things you need to know about an LLP and its registration: Separate legal entity: An LLP is considered as a hybrid between a corporate company and a partnership firm. The liability of each partner in an LLP depends on their contribution to the organization. Just like any other company, an LLP has a separate legal entity, but the cost of establishing and managing an LLP is comparatively lesser than that of a company. Register Your Startup Business Conditions for partners: An LLP must have a minimum of two partners (either individual or a corporate body). There must be two designated partners appointed for doing all the groundwork needed for an LLP. The designated partner must be a resident of India and must possess a Designated Partner Identification Number (DPIN) as prescribed by the Ministry of Corporate Affairs (MCA). Obtaining DSC: A Digital Signature Certificate (DSC) is mandatory for the incorporation of an LLP as all the documents need to be digitally signed before uploading them online. These DSCs can be obtained only through recognized certifying agencies. Name reservation: The name of any organization must be unique to avoid copyright and trademark issues. The previous method to reserve or change the name (Form 1) is now replaced by a new web service called Reserve Unique Name- Limited Liability Partnership (RUN-LLP), which makes the online name reservation process more feasible. The reservation is unblocked and the name is made available for other applicants if the LLP isn’t incorporated within 90 days of reservation. Process for RUN-LLP: The RUN-LLP process replaced the previous LLP name reservation process. Furthermore, this has reduced the required fields from 15 to 4, making the entire process simple. Form for Incorporation of LLP (FiLLiP): The second amendment of the Limited Liability Partnership Act of 2018 eliminated the Form of incorporation and subscriber’s statement (Form 2) and combined the three processes of name reservation, allotment of the Designated Partner Identification Number (DPIN/DIN) and the incorporation of the LLP into a single one. Attachments for FiLLiP: Just like every other application form, FiLLiP also has a prescribed set of documents to be produced along with it. They are listed below: The subscribers’ sheet The consent form Details of LLP or the company in which the designated partner is a member PAN and Aadhar cards of partners/directors Proof of registered offices like a sale/rent deed Along with any utility bill (electricity, gas, etc.) Also, a NOC from the registered office’s owner Uses of FiLLiP: The FiLLiP is also used as an application for reservation besides being used as an application for DPIN. Other eForms: Even after the introduction of the FiLLiP and the RUN-LLP, forms like Form 5, Form 17, and Form 18 still exist with minor modifications. These Forms are also processed and verified by the CRC. Central Registration Centre (CRC): For evaluating and consolidating the LLP documents, the web-service portal directs all documents like the RUN-LLP, FiLLiP, Form 17, Form 18, and Form 5 to a Centralized place by the Registrar of Central Registration Centre (CRC) on behalf of the jurisdictional registrar. This alternative reduces the time taken for processing the documents and catalyzes the growth of Indian businesses. Conversion of a company into LLP: Any company can be converted into an LLP if some conditions are satisfied. Every member of the company needs to agree with the conversion and by doing so, all members become partners of the LLP. Apart from the members, the creditors also become partners. The latest copy of the Income-tax returns must be submitted along with the required forms. Also, it must be made sure that there are no prosecutions against the company under the Companies Act. LLP agreement: Once the name of the LLP is approved, the LLP agreement needs to be formed. The agreement needs to contain instructions about the mutual rights and duties of the partner amongst themselves and also between themselves and the LLP. The agreement must be made within 30 days of incorporation of the LLP and must be made on a stamp paper (of the appropriate value prescribed by the respective state). The absence of an LLP agreement: If there is no LLP agreement, then the provisions of the First Schedule of the Limited Liability Partnership Act, 2008 will be invoked. Cost of registration: Though the LLP does not need a minimum capital it must have a government prescribed fee for each process of registering an LLP. For instance, obtaining a DSC costs around Rs.1500-2000 for partners approx., a DIN for Rs.1000 for two partners and Rs.200 for registration, etc. Time involved: With the introduction of online web services for speedy processing, the entire process right from obtaining DSc to filing Form 3 for an LLP agreement takes approximately 15 days if all the documents are appropriately submitted. Dissolution of an LLP: An LLP can be dissolved by following any of these methods: By declaring the LLP as defunct: If the LLP hasn’t carried out any business activity for more than one financial year, then it is considered as defunct. The company naturally becomes eligible to apply for dissolution. The registrar also can send a notice to a defunct company. Winding-up the LLP: The court or the tribunal can dissolve an LLP if it is in debt or if the number of partners has reduced more than two. The tribunal can dissolve an LLP if it is involved in any illicit activity. The partners also can voluntarily wind up their partnership on mutual terms. Limitations of Limited Liability Partnership: LLP is extremely popular in our country and is preferred by professionals in various fields like Architects, Chartered Accountants, etc., However, LLP also has a few advantages. The maximum number of partners in LLP should not exceed 20. The liability of the partners is unlimited. A single partner’s acts bind both the partnership firm and other partners, irrespective of whether they are ratified by all the partners or not. Similarly, an LLP faces many challenges in raising capital from banks and other such institutions. Also, the lack of transparency among partners is one of the disadvantages of LLP. Every organization registered under LLP faces these issues. These issues become a huge disadvantage only when ignored or when not attended. Conclusion: With LLP, your organization gets the structure of a corporate firm like that of a joint-stock company and the flexibility of management like that of a partnership firm. Therefore, with an LLP registration, you can get the best of both worlds. Several doubts would indeed arise when you begin the LLP registration process. So, it is recommended to hire a professional to help you with the process. We hope this clears your doubts and helps you enjoy the benefits of LLP registration.