Limited Liability Partnership is a business type which offers you benefits of company and flexibility of any Partnership firm. Therefore, an LLP is a combination of both the Partnership firm and the company. LLP was introduced to the corporate world in 2009, under the act of Limited Liability Partnership act 2008. This hybrid of two types of business is best for small and medium-sized businesses.
Due to the flexibility and ease of incorporation, India has received over 1 lakh registration since its introduction. Minimum 2 partners are required to incorporate LLP and there is no upper limit. The primary benefit of the LLP is that one partner is not responsible for the misconduct of other partners. The mutual rights and duties of all the partners are governed by a mutually signed agreement.
However, LLP is not capable of issuing equity shares. If any person is planning to raise equity funds for the business should ignore LLP.
The average time for the process of incorporation of an LLP takes around 15-20 working days subject to the Government processing time and submission of documents by the client. An assigned engagement manager will reach out to you for the collection of the necessary documents for the registration of LLP. The data can be submitted online through our legaltexpert website.
After receiving the information of the engagement manager will verify the documents and the process for obtaining Digital signatures would commence. On the submission of the digital signatures, the applicant needs to complete the OTP verification and video KYC check. Simultaneously, we also file a request with the MCA for reserving the name you have selected for LLP.
On obtaining the approval of the name and the digital signatures, we draft all the documents for the incorporation of the LLP and send them to the partners for signature. All of the partners then must sign the documents and upload them on the legaltexpert platform.
The signed documents are then submitted along with the application for the incorporation of an LLP to the MCA. The approval from the MCA takes around 2-5 working days. Once the approval is obtained the LLP would be incorporated and we begin with the process of helping you in obtaining a PAN for the LLP and also opening a bank account in the name of an LLP. Simultaneously, we also draft the LLP partnership deed. This partnership deed must be signed by all the partners on a stamp paper and the signed copy must be uploaded on the legaltexpert platform within 25 days of incorporation. Later, the signed LLP partnership deed is verified by the engagement manager and uploaded on the MCA portal within 30 days of incorporation for the final processing.
Many entrepreneurs are confused and want to know the exact difference between Limited Liability Partnership and Private Limited Company, as both share similar features. Check out the difference between both LLP and PVT LTD Company:
1. Registration Process: Somewhat the registration process of Private Limited Company and LLP is the same with some difference in the documents and forms required for incorporation.
Steps for the incorporation process of both Private Limited Company and LLP:
2. Registration Cost: LLP is basically designed to support small businesses and the registration cost of LLP is cheaper compared to the Private Limited Company. Also, LLP registration requires fewer documents that need to be printed on Non-Judicial stamp paper as compared to Private Limited Company.
3. Features: Both are separate legal entities and have separate assets/liabilities from the promoters. Though both the businesses are transferable, still Private Limited Company offers more flexibility when it’s about sharing or transferring ownership.
4. Ownership: In the LLP, all the partners hold the owner to manage and operate the LLP business. Therefore, a partner in LLP plays a significant role as both owner and manager. When it comes to ownership and ownership sharing, Private Limited Company offers flexibility to the promoters.
5. Compliance: For both business types Tax compliances are similar. LLP enjoys numerous benefits when it comes to compliance-related to the Ministry of Corporate affairs.
For LLP, there is no need for an audited account if and the annual turnover should be less than 40 lakh and the capital contribution should not exceed Rs.25 lakh. However, an LLP would have to file LLP Form 8 and LLP form 11.
Whereas, a Private Limited Company would have to file an annual return every financial year with the Ministry of Corporate affairs.
100% FDI permitted the automatic route. 100% FDI is approved in sectors and activities where there are no FDI-linked performance conditions and also, the 100% FDI is allowed. Now, foreign nationals can invest in the LLP.
Investment by NRIs, foreign nationals in LLP used to require government approval before 2015. As that process is expensive and tiring, the NRIs and foreign nationals preferred company registration over-investing in LLP. But now, with the flexibility of FDI norms, foreign nationals can easily register their LLP.
Getting your ownership for LLP is done by legaltaxpert.
Income Tax Return: LLPs must file the Income Tax Return by filling the form ITR 5. LLP partners can go to the online website of Income Tax and use the digital signature of any one of the partners.
MCA Annual Return – Form 11 should be filled before the 30th of May of the financial year. It contains details like the number of partners, the total number of partners, contribution received by each partner, details of the body corporate, and a summary of all the partners. Also, Form 8 should be filed within 30 days from the end of six months of the respective financial year. You need to pay prescribed fees while filling form 8. Fill the Form 8 before the 30th of October of every year.
Additionally, GST registration, GST return filing, and TDS filing are required for the LLP. All these things are based on the annual turnover and sales.
Legaltaxpert guides you to compile all the post-incorporation on time without involving in any offense.
Limited Liability Partnership must have at least two members and LLP can even start with any number of partners.
A person should be of more than 18 years of age. LLP Act 2008 allows making foreign nationals including foreign companies to incorporate an LLP in India. But they must have one Indian partner.
There is no minimum capital required to start an LLP. A partner can invest in both tangible and intangible property.
A Digital Signature Certificate helps to identify the sender electronically. The Ministry of Corporate Affairs (MCA) has mandated the digital signature of all the partners.