LLP Registration in India: Documents required, Process, Time Taken, and Fees

Limited Liability Partnership as a business structure is governed by the Limited Liability Partnership Act, 2008. LLP registration in India is gaining popularity for starting a new business. The number of newly registered LLPs has outpaced the company registration in recent years.

The LLP structure offers the flexibility of a partnership firm and benefit of a limited liability offered under a private limited company registration. The LLP relatively has lower compliances and easy funds movement as compared to private companies. The Bizfoc professionals assist in LLP registration from start to end, which is completely online and hassle-free.

What do you mean by a limited liability partnership?

A limited liability partnership (LLP) is an alternative business structure that offers the partners limited liability of a company and a high amount of flexibility in collaboration. It is a hybrid business structure containing elements of both partnership firms and Company structure.

The LLP can continue its existence irrespective of partners coming and going and is capable of entering into contracts and holding properties in its name. It is a separate legal entity and is liable for its assets, and the liability of partners is limited to the amount they have invested in a firm. Most importantly, no partner is liable on account of the unauthorized actions of other partners. Thus, individual partners are protected from the joint liability created by another partner's misconduct and wrongful business acts.

Eligibility for LLP registration in India

The minimum requirement for LLP incorporation is as follows:

1. Two partners are minimum
2. Out of all partners, two minimum designated partners are required. A corporate body cannot be a designated partner.
3. One partner must be a resident of the country where LLP is to be incorporated
4. LLP must have a registered office address
5. LLP must have business purposes
6. There is no minimum and maximum contribution defined in law. However, LLP should be incorporated with some contribution.

Mistakes to Avoid During LLP Registration

There are some common mistakes that individuals make during their LLP Registration. These mistakes can create a bad impact for a long term including in terms of financial loss. Following are the mistakes that should be avoided during Limited Liability Partnership Registration.

• Selection of Wrong Name: The most common mistake LLPs do is choosing the wrong name for their Limited Liability Partnership. Usually LLPs select any random name without checking its availability which results in rejection of the application.
  To Avoid: Make sure you have a unique name which is not similar to any existing registered LLP. Also check name availability before choosing any random name for your LLP on the MCA portal. LLPs must avoid names which are restricted by the Government under Emblems and Names (Prevention of Improper Use) Act, 1950.


• Error in LLP Agreement: While making LLP Agreement chances of errors are high. An LLP Agreement is the main component through which LLPs future rights, roles & responsibilities including capital distribution depends. Error in LLP Agreement either in profit-sharing ratio of partners, not specified role of any partner, etc can lead to failure of your Business.
  To Avoid: Ensure your LLP Agreement is filed with RoC i.e, Registrar of Companies within the 30 days of Incorporation of your LLP. Also, you can consult with a compliance expert just like Bizfoc to avoid LLP Agreement common mistakes.


• Mistake while filing FiLLiP Form: Chances of resubmission are very high if RoC finds any error in the Incorporation Form i.e, FiLLiP Form. While filing a FiLLiP form, mistakes in name, address, documents, etc can lead to rejection of your application.
  To Avoid: After filing the FiLLiP form check all details carefully before submitting. Attach all the up-to-date documents in correct format as well. It is advised to make a list of documents before starting the filing process as it will help in saving time while filing the application.


• Error while appointing Designated Partner: A Designated Partner is one of the responsible persons who have the authority to ensure compliance with the LLP Act, 2008. Also, he/she has the responsibility to fulfil other legal requirements of the LLP. Choosing the wrong or inappropriate Designated Partner can lead to a big failure of your LLP.
  To Avoid: Select a sincere and responsible person for LLP who can perform all his duties and legal obligation solemnly. Also make sure, one of the designated partners is an Indian Resident and at least stayed 182 days in India in the preceding calendar year.


• Neglecting Compliances or Post Incorporation Formalities: Another common mistake is ignoring post incorporation requirements or compliances. People have a myth that after getting their LLP registered their entity is safe and secure but the fact is LLP can get rejected by the government if they have not fulfilled the compliances and post incorporation formalities.
  To Avoid: Make sure once you have registered your LLP, complete all the post incorporation formalities before the due date. Some common compliances include opening a bank account for future transactions, getting an important license and filing LLP agreement on time.


• Error in Capital Distribution: Not distributing accurate capital among partners is one of the serious issues which can create disputes within the organisation. It can be possible due to not recording accurate profit-sharing ratio, or making changes while admission or retirement of any partner.
  To Avoid: Ensure you have clearly mentioned the Profit-Sharing Ratio of partners in the LLP Agreement and update the details of capital contribution in the books of accounts. Also at the time of Admission of any new partner or retirement of any existing partner, update the profit-sharing ratio in the LLP Agreement with the complete consent of all the partners.

Documents required for LLP registration

Documents required for LLP registration in India are divided into two sections:

1. Address proof of the registered office:

• Copy of a utility bill (electricity bill/Gas bill/Water bill/Broadband bill) that is not less than 2 months old. The registered office of the company can be commercial or residential. The utility bill should have the complete address of the premise.
• NOC from the owner of the property

2. Documents for Partners:

• Aadhaar Card and PAN card of each partner
• Copy of proof of partner’s residence - current bank statement or utility bill in the name of director, which includes the electricity bill, gas bills, broadband/telephone bill, etc., and not older than two months. Proof should have the complete address.
• Passport-size photo of partners.
• In the case of NRIs or foreign nationals, a passport copy is mandatory
• Note: If documents are not in english, then a notarized or apostilled transaction copy shall be attached.

Documents issued after LLP incorporation:

• Certificate of LLP incorporation
• PAN and TAN number of the LLP
• Digital signatures of all Partners in physical tokens
• DIN number of all Partners
• Notarised LLP agreement
• Complete set of various forms and challans filed with MCA

Compliances of post LLP registration

Once LLP registration is done, post-incorporation compliance and registrations will need to be done. We at BizFoc, with the help of its profound, highly skilled, and qualified professionals, guide you further and support you in fulfilling the post-incorporation compliance by LLP:

• Opening a bank account in the name of an LLP firm
• To Conduct Board Meetings and pass resolutions appointing authorized signatories in LLP to do necessary filings
• Obtaining necessary registrations like Trademark, GST, Shop Act, IEC, etc
• File annual returns and financial statements, such as maintaining balance sheets, cash flow statements, and profit and loss statements, and look after the LLP’s financial health.

Fees for LLP registration in India

The cost for LLP registration will be ₹6,698 which includes DSC making charges for two partners and professional charges but excluding GST charges.

Process for LLP registration

The procedure for the LLP registration process are as follows:

1. Name Reservation:

   The first step for LLP registration is to select a unique name and availability of the proposed name can be checked from the MCA Portal and trademark website. The proposed name is filed using RUN-LLP (Reserve Unique Name-Limited Liability Partnership) form.
   The name will be approved by the Registrar only if there are no trademarks and a similar LLP or company name exists. If the Registrar has disapproved the name for LLP registration, then there is an option of resubmission of the form within 15 days to rectify the errors.
   The name of the LLP shall end with either 'Limited Liability Partnership' or 'LLP.'

2. Obtain a Digital Signature Certificate (DSC):

   Obtaining a class 3 DSC of all partners is a significant part of LLP registration. As the online LLP registration has to be done, all documents will be uploaded online along with the digitally signed ones. If any partner has a valid DSC, then there is no need to apply further, and the same DSC can be used. DSC is downloaded in physical tokens similar to pen drives.

3. File LLP Incorporation form:

   For the LLP registration, FiLLiP (Form for incorporation of Limited Liability Partnership) is filed with the Registrar of the respective jurisdiction. The following documents and information are attached to the incorporation forms.

   • Details of all Partners
   • KYC documents of all Partners
   • Register office proof along with NOC
   • Consent form of all Partners
   • Certification by Practicing CA/CS
4. Submit the Agreement of LLP:

   The LLP agreement governs the mutual rights and duties of partners inter se and those of the LLP and its partners. The form has to be filed mandatory within 30 days of the date of LLP registration. LLP agreement must be filed in Form 3 online on MCA Portal.
   The LLP agreement has to be signed and notarized on stamp paper, as per the stamp duty that the state government prescribes. For instance, in the case of India, the stamp duty for LLP registration will be 1% of capital contribution (minimum ₹200 and maximum it will be ₹5,000) whereas in Gurgaon (Haryana), the stamp duty for LLP registration is ₹1000 fixed.

Time Taken for LLP Registration in India

Overall time taken to register the LLP in India is 7-10 working days.

Advantages of LLP registration

The benefits of LLP registration in India are covered below:

• Organized Business Structure:

  LLP is an organized business structure approved by the government body. Bankers and creditors prefer it due to its transparency of financials.

• No Minimum Capital Requirement:

  LLP doesn't not require any minimum capital to start a business, as they can be established with the least possible capital.

• Limited Liability of Partners:

  LLP partners have limited liability, which depends on their contribution. It means they are not liable to pay out from their assets because, during winding up and insolvency, only LLP's assets are liable to repay debts.

• Higher Flexibility:

  As compared to other corporate structures, the LLP provides high flexibility to withdraw funds and take unsecured loans from third parties. Functions and profit distribution are written under the agreement between the partners of the LLP. It leads to flexibility in the business management system.

Conclusion

Every partner of an LLP would be, for the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited except in case of unauthorized acts, fraud, and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. The liabilities of the LLP shall be met out of the property of the LLP.