The Limited Liability Partnership (LLP) is a recent corporate structure or format. It combines the quality of being flexible and the benefits of limited liability of the company. It can be at a low compliance cost.
In LLP, the partnership has the right to hold the ownership and to hold the power to manage the LLP. Hence, the partners in LLP has the capability of being an owner as well as a manager. The limited liability partnership is very familiar and preferred by professionals like software firms, architects, accountants, chartered, designers, etc. They like to set up their business entity. For starting an LLP, the directors or partners bring up their minimum amount as the capital as their investment for starting an LLP.
Concepts of LLP
- LLP is an alternative corporate business form that gives the advantage of limited liability of a company and the flexibility of a partnership
- Moreover, it can also hold contracts and hold property in its own name. The LLP can continue its business irrespective of changes in partners
- The legal entity is separate from the LLP. It is responsible for the full extent of its assets but the liability of the partners is related to their agreed contribution
- Furthermore, one partner is not liable to another partner on account of independent or unauthorized actions. So, each partner has their own responsibilities and rules to be followed
- Mutual rights and duties are governed by an agreement between the partners. Further, this agreement is between the partners and the LLP
- Therefore, LLP is called a hybrid structure, since it has the combination of both a corporate structure and a partnership firm structure.
Important Facts About Limited Liability Partnership
- It is like a combination of a partnership or a simple partnership firm and a private limited company
- Additionally, this literally means while you have partners for sharing profits and losses in the equal subsistence
- Further, the profit or loss can be done by sharing the ratio of the partnership or LLP. They have an agreement on all the causes of the partnership. They are also supported by limited liability
- This means that, if they are not able to pay the debts of their LLP, their personal assets or property will not be affected.
Advantages of LLP
LLP form is a form of business structure or model. It is organized and is operated on the basis of an agreement
- It doesn’t need any detailed legal and procedural agreement since it is very flexible.
- Additionally, it enables professional expertise which combines the financial risk in an innovative way and in an efficient manner.
Procedure to Register for an LLP
- First, you need to apply for a Digital Signature Certificate for your LLP. This is nothing but an E-signature to help you complete your registration process online instantly
- Additionally, for getting started with digital signature certification, it normally takes two business days after you submit your documents
- After the above step, next, we apply for a director application number or DAN number which normally takes one business day
- Now, the next step is choosing a good name for your LLP. For instance, the LLP’s name does not have to be your brand name. You can choose whatever name you are familiar with.
- These processes are very simple and straightforward and you are almost certain to get your LLP name.
Flexible Idea of an LLP
Since LLP in India is a newly growing business, there is some flexibility in running a LLP
Convenience
It is easy to start a business for entrepreneurs. Additionally, the agreements for LLP are specific in accordance to meet the requirements of the directors or partners.
Minimum Capital Requirements
An LLP can be started with a minimum amount of investment. Their capital amount can be in the form of
Documents Required
Documents required for LLP online company registration in India are for both the directors and for the office as follows
For the Directors
- PAN card or passport for an identity proof
- Voter’s ID, passport, or driver’s license for address proof
- Latest bank statement, or Electricity bill or residence proof
- Passport size photograph for each director
- Specimen signature from the director
For the Office
- A proper notarized statement of the rental agreement
- No Objection Certificate (NOC) from a property owner if it is a rented property
- Sale deed or property deed in case of owned property
Once the documents are submitted properly, the registrar will prepare your memorandum and articles. Further, they will let you know about the registration fees and stamp duty details. You will further receive your company PAN and TAN Card. Visit Vakilsearch to know more!
