What is a Limited Liability Partnership (LLP)

A Limited Liability Partnership Registration is one of the most popular business structures which generally gives people the best of both worlds: ominf, decidability, and the ability to grow, but not personal liability. This is a versatile business structure that has got features of a Private Limited Company a traditional partnership, and a limited liability company; hence, it appeals to profiled businesses.

Procedure of obtaining LLP Form

• Step 1: Check Name Availability

Before lodging the incorporation application of LLP check its name in the database of MCA to confirm that the name has not been used or not too similar to that of any existing company, including Limited Liability Partnership (LLP). Name shall not be identical or too similar to any of the existing companies. It can be reserved through the filing of an application with the Registrar of Companies under RUN.

• Step 2: Get a Digital Signature Certificate

It says that in order to get DSC or Digital Signature Certificate, it is mandatory to register with a certified authority.  This is necessary for filing documents in electronic format with the MCA.Contact a government website for the MCA (Ministry of Corporate Affairs) at (www.mca.gov.in) to for the filing of LLP documents and creating a user account for filing requirements.. It's a hybrid model that combines the benefits of Private Limited Company a traditional partnership and a limited liability company, Hence, it becomes a relatively flexible and popular choice for commercial companies and firms.

• Step 3: Create an MCA Portal Account

Create a user account on the MCA portal (www.mca.gov.in) to file requirements and Process of Limited Liability Partnership Registration Create a user account on the MCA portal (www.mca.gov.in) to file LLP registration documents. This account shall be used to sign in and run all your LLPs’ online filings and monitor the progress of your application.

• Step 4: Filing of LLP Registration Document

Prepare the necessary documents, including:

1. Subscriber’s Statement which contain basic information about the LLP and its subscribers

2. Particulars of Designated Partner(s) and Consent of Designated Partners in FiLLiP form

3. BIHAR RENT AGREEMENT FORMAT (Agreement drafted and signed by all the partners) IN FORM – 3

Submit these documents in an electronic form with the ROC using the MCA portal.

• Step 5: Pay Registration Fees

Charges for registration must be settled and details of each member’s capital contribution provided, before the registration is completed.

• Step 6: Wait for Approval

Get the approval of the LLP’s registration from the ROC. After that, the ROC will validate the documents and do a background check on the partner company.

• Step 7: It is advisable for you to apply for a certificate of incorporation

• Step 8: Get PAN and TAN

A PAN and TAN are necessary for meeting the tax requirements with the Income Tax department. These documents are important for both compliance with the local council’s rules and filling out needed returns.

• Step 9: Open a Business Bank Account 

Organize the LLP’s money by opening a business bank account. This requirement must be met throughout business activities and in financial transactions.

• Step 10: File LLP Agreement

Partners must mention the place of business (PoB) and connect their LLP with the GST Common Portal or GST Suvidha Kendra (if needed) and the Income Tax Department for PAN and TAN in the first 30 days after incorporation. Such documents must be handed over for Raipur Municipal Corporation purposes and filing tax returns.

• Step 11: Obtain Other Registrations

Make sure you have the additional registrations required for your unit:

1. GST Seva Kendra (or GST Suvidha Kendra)

2. Professional tax registration (only applicable in some places)

3. Registration of a shop and establishment (if it exists) must be done along with the legal business name.

• Step 12: Satisfy Ongoing Regulation

Make sure to follow all on-going essentials, for example:

1. Covertually delivering your annual returns form 11 to the Registrar of Companies

2. For this reason, accounting records and financial statements need to be constantly up to date.

3. Properly submitting your annual income tax returns and faithfully observing the accompanying acts required by them.

Benefits Of The Limited Liability Partnership (LLP)

• Separate legal entity : An LLP maintains a distinct legal identity which resembles company status. The organization status of the LLP functions independently from its member contributors. Through its own business name the LLP possesses the rights to sue and become subject to legal action. The LLP uses its name to sign contracts that helps build trust with stakeholders along with encouraging clients and suppliers to feel confident about doing business with them.

• Limited liability of the partners : Among the members of LLP they hold financial responsibility only through their investment. Each partner bears responsibility up to their original partnership capital contribution amount. The contribution amount which partners make serves as their maximum liability because they remain safe from personal financial responsibility for business losses. During an LLP's time of closure, it results in the assets of the establishment being responsible for settling business obligations while partners maintain their limited financial exposure. 

• Low cost and less compliance : An LLP's formation expenses remain lower than those of establishing either a public or private limited company. An LLP needs to meet limited compliance obligations. Two necessary annual documents compose the LLP's filings: Annual Return together with Statement of Accounts and Solvency.

• No requirement of minimum capital contribution : The formation of an LLP requires no minimum required capital. All types of companies can proceed with incorporation without needing minimum paid-up capital. An LLP can emerge through any level of capital provided by its partners.

Disadvantages of Limited Liability Partnership (LLP)

• Penalty on non-compliance : The Minimal standards of compliance set for LLP organizations represent their main burden. Late compliance with required tasks leads to substantial penalties imposed on LLP legal entities. Each year even LLPs without business operations must submit annual returns to the Ministry of Corporate Affairs (MCA). The LLP will face severe penalties from the government when it skips its mandatory return filing obligations.

• Winding up and dissolution of LLP : LLPs need at least two partners to establish their operations. A decline in the number of partners below two for six consecutive months will lead to an automatic dissolution of the company.

• Difficulty to raise capital  : The LLP excludes shareholder constructs present in company structures yet differs transactionally from other SSU entities. Venture capitalists along with angel investors are prohibited from becoming shareholders within an LLP structure. Each shareholder needs to serve as LLP partner to gain full partner rights which include all responsibilities associated with partnership. The preference of angel investors along with venture capitalists for investing in companies over LLPs results in capital funding challenges for business entities that use the LLP structure.

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