Before you become too excited about the prospects of getting yourself an LLP registration, it is critical that you examine whether or not LLP registration in India is the best option for you.
LLP registration is a versatile, legally recognizable organization that enable partners of a business to operate efficiently and maximize profits by operating together while also limiting their liability for the conduct of other partners in the business.
Importance of the LLP Agreement
A limited liability partnership (LLP) is formed on the basis of a legally enforceable contract entered into by the members (partners) of a partnership. The objective of this document is to foster a business relationship based on good faith among partners all the while safeguarding the rights and interests of each individual partner and the LLP as a whole. While there is no legal obligation to have a general partnership registered, LLPs should be registered with an executed LLP agreement.
|An LLP’s name should be unique, and it should not be the same or similar to the name of any existing company, LLP, or trademark that is registered or applied for. Get in touch with the Vakilsearch experts to avail a free LLP name availability check.|
Documents Required for LLP Registration
- The most recent passport size photographs of all partners’
- PAN card of the partners
- Each and every partner’s identity proof (aadhar card, passport, driving license or voter ID card)
- Specimen signature
- Each and every partner’s address proof (bank statement or passbook, electricity bill, telephone bill, aadhar card or any utility bill)
- Copy of each and every partners’ mobile bills, telephone bills, electricity bills, or bank statements with current addresses
- Registered office address proof – electricity bill with rent agreement and NOC / ownership proof of the proposed registered office
- LLP agreement and stamp paper of the relevant state in which the LLP will be incorporated
|All the above-mentioned documents must be self-attested.|
Is the LLP Registration Process the Best Option for You?
There are certain bare minimum constraints while incorporating an LLP. If and only if you are able to fulfil the following conditions will you be able to legally incorporate and operate an LLP?
- An LLP must be registered by at least two people. However, there is no upper restriction on the number of partners.
- Capital in the case of an LLP is determined by the needs of the business and the participant’s contributions to the partnership. The amount of capital determines the Stamp Duty on the deed. There is no minimum capital requirement to commence business as an LLP.
- At Least one of the LLP designated partners must be a resident of India.
- The accounts of an LLP is to be audited when its turnover is equal to or more than ₹ 40 lakh and when its total capital contribution is equal to or more than ₹ 25 lakh.
Once you are certain that you fulfil the above-mentioned bare minimum criteria of incorporating an LLP, you can then evaluate the feasibility of the same by going through the reasons for registering an LLP underlined in the following section of this blog.
Reason for LLP Registration
- Leverage the Operational Ease of a Company and the Flexibility of a Company
The primary benefit of an LLP is that it is easier to set up and administer, with less paperwork. Even though they are similar to companies in that they exist independently of their partners, they are less expensive to register. The LLP is a good vehicle for small firms and venture capital investment due to its flexibility in structure and management.
- Take On Lesser Compliance and Tax Burden
Annual ROC compliance in an LLP is lower than in a private limited company as there is no obligation for a mandatory audit. Moreover, its regulatory compliance is very minimal in comparison to the company structure. Additionally, in the case of an LLP, there is no incidence of dividend tax as well.
- Create a Separate Legal Entity and Limit Your Liability
The liability of partners in an LLP is limited and is confined only to their contribution to the LLP. In fact, an LLP is a separate legal body and a juristic person distinct from its partners, and both can sue and be sued. Even after a partner dies, the LLP continues to exist. Moreover, an LLP’s ownership can be simply transferred to another person transferee, however, should be inducted as a designated partner of the LLP. Additionally, partners and the LLP can lend to one another.
Whether you’re still evaluating the feasibility of LLP company registration or looking to undergo LLP registration online, we recommend that you engage the legal expertise of the experts at Vakilsearch. Our team of professionals will leave no stones unturned in their consistent endeavour to ensure that you incorporate the business structure which is most suitable to your needs. Get assistance from Vakilsearch today!