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What Is Limited Liability Partnership: Explanation Of LLP Registration Process

what is limited liability partnership

Limited Liability Partnership or LLP was first introduced in India in 2009 and has become a popular mode of incorporating a new company among entrepreneurs and startups in India.

There are several inherent advantages of registering and incorporating a company as an LLP since it embodies a partnership firm’s relevant features and a corporation into one.

This article will share information like what is a limited liability partnership, step-by-step LLP registration process, and the exact LLP incorporation procedure, which will be of immense benefit to the new entrepreneurs.

The Process of Incorporation of LLP includes several procedures, which need some expert assistance and mentorship. At the end of the article, we will explain how you can avail of this mentorship instantly, right now.

But first, What is an LLP company?

What Is A Limited Liability Partnership?

The Ministry of Corporate Affairs formulated and introduced a new form of company structure called Limited Liability Partnership in 2009, under the Limited Liability Partnership Act, 2008.

By default, this form of company has a partnership firm’s flexibility and the robust features of a limited liability company, embedded into one.

Although an LLC will have partners as a legal entity, there will be a limited liability on every partner. This means that the designated partners’ personal assets cannot be used to pay the pending dues of the LLP firm.

This is one of the biggest advantages of an LLP firm, and this is why this form of company structure has become very popular among new startups and partnership firms.

Features Of LLP Firm

Before understanding how to register an LLP company and finding out about LLP registration costs, it’s essential to know the features of an LLP firm and why it’s so popular nowadays.

5 Important features of LLP firm:

Legal Entities Are Separate: The partners and the LLP firm are separate legal entities, and this is the most important USP of an LLP firm. The legal liabilities of the partners cannot be extended to their personal assets. However, the LLP firm’s legal liabilities can be extended to the properties owned by the LLP firm.

Foreigners Allowed: Foreign nationals and companies are allowed to open an LLP firm in India, but at least one designated person should be Indian.

No Minimum Capital: No minimum capital required to launch a new LLP company in India.

No Upper Limit Of Partners: Minimum of two partners are mandatory to launch an LLP company, but there is no upper limit.

Audit Is Not Mandatory: Unless the annual turnover of an LLP firm crosses Rs 40 lakh, there is no audit required. 

Step By Step LLP Registration Process

Step1: Register For Digital Signature Certificate

As with all companies’ registration process, the partners need to have a Digital Signature Certificate as the first step for registering a LLP company.

Govt of India has authorized these agencies as the official partners for creating Digital Signature Certificate:

IDRBT Certifying Authority (http://idrbtca.org.in/)

E-mudra (http://www.e-mudhra.com/)

Code Solutions (https://www.ncodesolutions.com/)

Safescrypt (http://mcacert.safescrypt.com/home.html#)

Tata Consultancy service and 

National Informatics Center (https://nicca.nic.in/)

More details about them can be found here.

Step 2: Generate Director Identification Number (DIN)

Every partner needs to generate a Director Identification Number (DIN), which can be done via DIR-3. This form can be downloaded from here.

Aadhaar and PAN card are required for filing this form, which should have a signature from the Company Secretary employed with the LLP company or the Managing Director/Director/CEO/CFO of the company.

Step 3: Registering The Name Of The LLP

Via Limited Liability Partnership-Reserve Unique Name or LLP-RUN, the new LLP firm’s name needs to be registered and locked. The Central Registration Centre processes this under Non-STP.

It’s always recommended to check whether your new name of the LLP firm is already registered or not, via MCA portal’s name check service.

In case the new name does not follow the naming protocols and/or is the same as any other registered company, this request can be canceled, and you can reapply within 15 days of rectifying the mistake.

Step 4: Incorporation Of The LLP Firm

LLP incorporation procedure is done by filing the FiLLiP or the Form for incorporation of Limited Liability Partnership.

This form, called FiLLiP, needs to be filed with the registrar under whose Jurisdiction lies the city where the LLP firm’s registered office is situated. 

This form can also be used to file a new DIN, in case the designated partners still don’t have the DIN generated.

Step 5: Limited Liability Partnership Agreement

Lastly, the Limited Liability Partnership Agreement needs to be filed, which can be done via Form 3, available on the MCA website. 

LLP Agreement needs to be filed using stamp paper, whose value will change as per different states’ Jurisdiction. Note here that the Limited Liability Partnership Agreement needs to be filed within 30 days of incorporating the LLP company.

Documents Required For LLP Registration

LLP registration documents include:

For Partners:

Aadhaar

PAN Card

Address proof of the partners

Residence proof of the partners

Photograph

Passport (in case of foreign partners)

Digital Signature Certificate for every partner

For LLP Firm:

Proof of Registered office

Digital Signature Certificate

LLP Registration Cost

Digital Signature Certificate Rs 1500-Rs 2000 for two partners
DIN Rs 1000 for 2 partners
Name registration Rs 200
Incorporation Rs 500 for contribution till Rs 1 Lakh; Rs 2000 for Rs 1 lakh to Rs 5 lakh contribution
LLP Agreement Rs 50 for filing Form 3 and stamp duty (till Rs 1 lakh contribution)

Need more clarity and expert guidance on understanding what is an LLP company, and LLP registration process?

Book an appointment with company registration experts at MSMEx, which is a micro-advisory platform, and clear all your doubts instantly.