The creation of an LLP simplifies the formation of the business and creates a flexible working environment. Find out how many partners are needed to form an LLP?
The responsibility of each partner in an LLP is limited to his agreed contribution. Individual partners are also protected from joint responsibility produced by another partner’s improper acts or misconduct since no partner is accountable for the autonomous or unauthorised acts of other partners. Read more to learn to form an LLP.
Number of Partners Needed to Form an LLP: Minimum and Maximum Limit
An LLP must have a minimum of two partners to be formed. If the number of partners in the LLP falls below two for six months, the partner who continues to work in the LLP becomes personally accountable. On the flip side, there is no limit to the number of partners you may have in an LLP
A normal partnership, on the other hand, can only be formed with a minimum of 2 partners and a maximum of 50 partners. Hence, we can observe while the lower ceiling is identical in both a partnership and an LLP, the upper ceiling is restricted in a partnership while it remains open-ended in an LLP.
Limited Liability Partnership Registration: An Overview
To create a limited liability partnership in India, you must first obtain a Director Identification Number (DIN), which may be obtained by filling out an e-form. Then you must obtain your Digital Signature Certificate for the purpose of registration. After that, you must get the name of the LLP authorised by the Ministry of Corporate Affairs. After the LLP name has been authorised, you may file the incorporation form to register the LLP.
Compliance Requirements: Pvt. limited companies v. LLPsCompanies are required to keep numerous registers and records, which necessitates a lot of document and file upkeep. LLPs, on the other hand, are not required to keep such stringent statutory registers. |
Disadvantages of a Limited Liability Partnership
- The biggest disadvantage of a Limited Liability Partnership is that it is required to file an income tax return and an MCA annual return every year, even if it has no activity. If it fails to do so, it may face severe consequences.
- If one of the partners wants to transfer his or her ownership rights, all of the other partners must agree.
- There must be at least two members in a limited liability partnership. If one of the partners decides to quit the LLP, it will have to be dissolved if no suitable replacement is found.
The incorporation fee for an LLP depends on the capital contribution to it. The following are fee slabs outlined by the MCA:
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The Bottom Line
Two partners are required to be in an LLP at all times. Reach out to the experts at Vakilsearch when you’re ready to form your LLP.
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