Is LLP Registration Mandatory?

Introduction 

There is a certain rise in the establishing new LLPs in India over the past years. It is because LLP is a modern business structure which allows limited liability to its partners. LLP is a structure in which a partner's personal assets are separate from the LLPs. To start an LLP in India it is mandatory to complete the LLP registration process. There are certain forms required to be filed on time to register the LLP Successfully. It includes filing of the FiLLiP form, RUN Form, etc. Read this blog to know the complete process to register your Limited Liability Partnership in India. 

Is LLP Registration Mandatory?

A limited Liability Partnership is separated from its members and they are liable only for the amount they invested. Limited Liability Partnership includes the benefits of both a company and a partnership. In a LLP, partners' personal assets are safe and secure. In case of any debt or liability of LLP, they don’t need to pay from their personal assets as LLP is considered as a separate legal entity. The LLP is the only individual who can be sued in case of debt or liability.

If you want to start an LLP in India, it is mandatory to do LLP Registration. An LLP must be registered under the Limited Liability Partnership Act, 2008. After the successful registration an llp will be considered as a separate legal entity. If the LLP is not registered then it will not be considered as a separate legal entity and partners can’t enjoy the benefits such as limited liability, legal recognition, etc.

Features of LLP Registration

There are certain features of a Limited Liability Partnership which highlights its working style. These features are as follow: 

• Perpetual Succession: LLP continues its operations irrespective of death, retirement insolvency or change of a partner. 

• Separate legal entity: In this, the partner’s liability is limited which means their assets will not be used to pay LLPs debts. 

• Mutual Agency: It is a mutual agency and partners are independent to give their opinion. 

• LLP Agreement: Every LLP has its own LLP Agreement which includes the rights and duties of the partners. 

• Minimum & Maximum Number of Partners: Atlast two designated partners are required to start a LLP. There is no maximum number of partners in LLP.

Steps to register an LLP

There are certain steps designated partners should follow in order to register an LLP. These steps are as follow: 

Step 01: Obtain DSC: The first step is to obtain the Digital Signature Certificate of designated partner of the LLP. The DSC of all the designated partners is required as the process of LLP registration is completed online, so the digital signature required. 

Step 02: Apply for DPIN: Once you submit the DSC of all the partners, then you have to apply for DPIN (Designated Partner Identification Number) of all the designated partners and of those who intend to become a designated partner in near future. You can get DPIN by filing a DIR-3 form. 

Step 03: Name Approval for LLP: After obtaining DPIN, you have to file RUN (Reserve Unique Number) form in order to obtain the approval for the name of your LLP. 

Step 04: Incorporation of LLP: After getting the approval, you need to file the FiLLiP form which is - Form for Incorporation of Limited Liability Partners. This form simplifies the process of registration under the LLP Act, 2008. 

Step 05: File LLP Agreement: Then you need to file the LLP agreement which includes the rights and duties of all the partners. This agreement can be filed by using the form-3 on the MCA portal. This form must be filed within 30 days after the incorporation. 

Conclusion

LLP Registration is a mandatory registration required in order to start its operations. The process to register the LLP includes obtaining DSC, DPIN of all the designated partners. It includes the filing of RUN form, FiLLiP form for LLP registration & form-3 (Within 30 days of incorporation) to file the LLP agreement on the MCA portal. To start a LLP, there is no minimum capital required but you need at least two designated partners. However, there is no maximum limit of partners. Also, you need to prepare an LLP Agreement before starting its operations including rights and duties of the partners. This agreement helps in reducing the chance of conflict between members to ensure smooth functioning. 

Frequently Asked Questions (FAQs)

• Is it mandatory to register an LLP?

Yes, it is mandatory to register an LLP under Limited Liability Partnership

• What is the minimum capital required for LLP Registration? 

There is no minimum capital required for LLP Registration. 

• Is GST required for LLP Registration? 

No, GST registration is not mandatory for LLP Registration. However, you need to take GST if turnover exceeds a certain threshold. 

• What is the Tax limit for LLP? 

There is a 30% tax limit for llp on the total income.