Since an LLP combines elements of both a corporate and a partnership business form, it is referred to as a hybrid of a corporation and a partnership. In this article, we will be investigating the costs involved in registering an LLP in India.
A limited liability partnership (LLP) is comparable to a corporation in that it exists independently of its partners. Any amount of minimum capital can be used to form a limited liability partnership (LLP). The partners’ liability would be limited to the amount they agreed to contribute to the LLP. Learn more to Register an LLP in india.
The primary advantage to register an LLP is that it is simpler to set up and administer, with lesser procedures involved in the incorporation process. Moreover, an LLP has a lower registration fees levy than a corporation and there is no requirement for a mandated audit. Yearly ROC compliance is lower than that of a private limited business.
What is a limited liability partnership (LLP) company?
So, a limited liability partnership (LLP) company is a type of business structure that combines elements of both partnerships and corporations. In an LLP, partners have limited liability similar to shareholders in a corporation, meaning their personal assets are generally protected from the debts and liabilities of the business. LLPs are commonly used by professional service providers such as lawyers, accountants, consultants, and architects.
What are the features of LLP?
The features of a limited liability partnership (LLP) include:
- Limited Liability: Like a corporation, LLP offers limited liability protection to its partners. This means that partners are not personally liable for the debts and liabilities of the business, except in cases of misconduct or negligence.
- Flexible Structure: LLPs offer flexibility in terms of management structure and decision-making processes. Partners can choose how they want to organize and manage the business, and they are not required to adhere to strict corporate formalities.
- Pass-through Taxation: LLPs typically enjoy pass-through taxation, meaning that profits and losses are passed through to the individual partners, who report them on their personal tax returns. This avoids the issue of double taxation that corporations often face.
- Separate Legal Entity: An LLP is a separate legal entity from its partners, which means it can enter into contracts, sue or be sued, and own property in its own name. This provides legal protection and continuity of the business beyond the life of individual partners.
- Limited Compliance Requirements: LLPs usually have fewer compliance requirements compared to corporations. They may be exempt from certain corporate formalities such as holding annual general meetings, issuing stock, and maintaining detailed corporate records.
- Professional Services Focus: LLPs are commonly used by professionals such as lawyers, accountants, architects, and consultants. Many jurisdictions restrict LLPs to certain types of professional services to maintain professional standards and ethics.
- Minimum Capital Requirement: In some jurisdictions, LLPs may have a minimum capital requirement for formation, but it is generally lower than that required for corporations.
- Regulated by Law: LLPs are governed by specific laws and regulations in each jurisdiction where they operate. These laws outline the rights, duties, and responsibilities of partners, as well as the procedures for formation, registration, and dissolution of the LLP.
Incorporation Cost to Register a LLP in India
The incorporation fee for a Limited Liability Partnership depends on the capital contribution to it. The following are fee slabs outlined by the MCA:
- ₹ 500/- for the incorporation of a limited liability partnership with a capital contribution of less than ₹ 1 lakh.
- ₹ 2000/- for the incorporation of a limited liability partnership with a capital contribution of more than ₹ 1 lakh but less than ₹ 5 lakhs
- Further, ₹ 4000/- for the incorporation of a limited liability partnership with a capital contribution that exceeds ₹ 5 lakhs but does not exceed ₹ 10 lakhs –
- ₹ 5000/- for the incorporation of a limited liability partnership with a capital contribution of more than ₹ 10 lakh.
| LLP incorporation takes roughly 10 days, subject to official approval and response from the competent department, between acquiring DSC to filing Form 3. |
Other Costs Involved in Registering an LLP in India
- Reservation of the name of LLP which is valid for 90 days, after which it expires.
- Digital signatures charge for both designated partners, which depend on the certifying agency
- Form fees for Registration
- LLP agreement drafting fee
- DIN form fees
- Stamp duty towards execution of the LLP agreement which varies from state to state
- Fee towards the registration of the agreement within 30 days of Registration. This fee depends on capital contribution and if it is not filed within 30 days will result in the incurring of a ₹ 100/- per day late fee.
Professional Legal Fees Involved in Registering an LLP in India
It is prudent to earmark professional legal fees while registering an LLP in India. This is to ensure that the process goes smoothly and is legitimate all the way through. If you’re looking for affordable counsel, you should seek the advice of the legal experts at Vakilsearch, who will handle everything, from the drafting of the LLP agreement, and reservation of LLP name to registration procedures and post-incorporation compliance formalities.
FAQs
What is the cost of LLP registration in India?
The cost of registering a Limited Liability Partnership (LLP) in India varies depending on factors such as professional fees, government filing fees, and other incidental expenses. On average, the registration cost can range from ₹8,000 to ₹15,000, excluding any additional services or consultancy charges.
How long does it take to register an LLP in India?
The timeline for registering an LLP in India typically ranges from 15 to 20 working days, provided that all the required documents are properly prepared and submitted, and there are no discrepancies or delays in the approval process by the Ministry of Corporate Affairs (MCA).
What are the requirements for LLP in India?
The requirements for registering an LLP in India include:
- Minimum of two designated partners
- Designated partners must have a Director Identification Number
- (DIN) and Digital Signature Certificate (DSC) Registered office address in India
- No minimum capital requirement
- LLP Agreement Compliance with LLP Act and Rules
What are the mandatory forms for LLP?
The mandatory forms for LLP registration and compliance in India include:
Is LLP better than Pvt Ltd?
The choice between a Limited Liability Partnership (LLP) and a Private Limited Company (Pvt Ltd) depends on various factors such as the nature of business, long-term goals, taxation, compliance requirements, and liability considerations. Generally, LLP is preferred for small to medium-sized businesses, especially professional services, due to its simpler compliance procedures, pass-through taxation, and limited liability protection. Pvt Ltd, on the other hand, offers more credibility, easier access to funding, and greater scalability, making it more suitable for larger businesses with growth ambitions. Ultimately, the decision should be based on the specific needs and objectives of the business owners.
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