How to Register an LLP in India?

What is an LLP? Why register for an LLP? What are its benefits? If that’s beneficial, how to register an LLP in India? How much will be the cost? Can I register as well?

I know you may have questions like these and more.

I am here to answer all of your questions and guide you through the process of registration. But first, the basics.

What is an LLP?

Register an llp in india

LLP stands for ‘Limited Liability Partnership.’ LLP is a substitute corporate business that provides you the benefits of ‘limited liability’ of any company or enterprise along with the flexibility of a partnership.

In LLP, any party included in the partnership does not account for the misconduct or carelessness of any other partner.

Also see: How to register an LLC in India?

Benefits of registering as an LLP

LLP registration has become a very popular form of business in India. It is quite an advantage as it offers the best conditions between a company and a partnership.

The idea of LLP in India was introduced in 2008, and it has proved to be very helpful for setting up small and mid-sized businesses. 

Registering for LLP comes with tons of benefits, and this is why it is so popular.

A few of the benefits registering as an LLP are:

  1. LLP shields every partner’s personal assets in the business from the accountabilities of the business. LLP is an entirely separate legal body in the partnership.
  2. LLP is thus said to be ‘a legal person‘. It can purchase, rent, own, take the lease, employ people, take part in contracts and is liable in the business.
  3. LLP offers the flexibility of a partnership-based business. The distribution of profit in the partnership is solely determined by it and has a written contract. Thus it aids in the management of any business.
  4. Any member can take part in an LLP with two levels of membership viz. Designate and non-designate.
  5. LLP provides corporate ownership. In any limited enterprise, at least one director has to be a real person, though.
  6. LLP registration also protects the partnership name. You can prevent the registration of any duplicate name by registering the LLP at the company’s house. 
  7. LLP has a huge tax advantage. It allows its partners to join or leave the partnership without any tax burden. The members are taxed directly based on the individual profit earned. It does not consider any money they withdraw from the LLP.

Eligibility Criteria for LLP Registration

There are various terms and conditions you require to meet if you want to register for LLP.

  • The minimum age requirement to start an LLP is 18 years though a person below 18 years can also become a partner in the proposed LLP.
  • Minimum two members are required to start an LLP. However, note that there is no limit on the maximum number of members.
  • Excluding Stamp duty, there is no lower limit on the Capital requirement to start an LLP.
  • To propose an LLP in India, at least one of the members must be an Indian Citizen.
  • Your proposed LLP name should not be similar to any other existing company or enterprise. Name/brandname must be unique. 
  • If you meet the terms and conditions, now we will discuss how to register for an LLP in India.

Becoming an LLP in India

There are a few cases where you can either start a brand new LLP or convert an existing partnership into an LLP in India.

Here I will discuss each of those briefly.

How to start an LLP (Limited Partnership Liability) in India from scratch?

The most basic requirement to register for an LLP in India is applying for DPIN (Designated Partner Identification Number).

It is very simple as you need to fill out an e-form and submit it to the authorities.

Then you will get your Digital Signature Certificate and use that to register it officially.

Next, your LLP name has to be approved by the Authority. Once it’s approved, you can go ahead and register the LLP by filling out the concerned form.

Let’s see these steps in a bit more detail.

Starting an LLP in India from Scratch
Here are the steps that you should be following:
Apply for DIN (Director Identification Number) or DPIN (Designated Partner Identification Number)
Every partner in the LLP that they are applying for should have a Designated Partner Identification Number (DPIN). To obtain the number, each needs to fill up an e-form called DIR-3 and submit it. Having either DIN or DPIN gets the job done. So, if you already have a DIN (Director Identification Number) no need to go through this step. 
Register DSC (Digital Signature Certificate)
From year 2000, via The Information Technology Act, Digital Signatures started to ensure the authenticity and safety of documents and forms filled online / electronically. Thus while filling up forms or any other document for LLP, you need to use your Digital Signature to ensure the security and authenticity of the documents.

The verification process can only begin after the concerned parties applying for the LLP have registered their DSC(s) (Digital signature certificate(s)). You need to visit the official website to register for DSC to get the work done.
Acquire DSC
In India, a licensed CA (Certifying Authority) issues and verifies the DSC. The CA is chosen under Section 24 of the Indian IT-Act 2000 to get the job done. You will have to get a DSC to register your LLP.
Register as a New User on LLP Portal
The next step is to register as a ‘New User’ in the LLP portal so that you can fill out the form to apply for LLP. You have to register yourself as a ‘relevant user’ like a registered or business user here. Click here to start the registration.

Registered User has access to the basic e-Services of MCA. All users under this category have a ‘Password’ based login.

Business User has access to certain specific functionalities, in addition to all the basic e-Services of MCA which are available to a Registered User. Users under this category primarily have a ‘DSC’ based login and consist of practicing members of ICSI/ICAI/ICWAI and individuals associated with companies.
Register as an LLP
Once you have registered, you will have to apply as an LLP from your account. The form is named ‘Application for reservation or change of name.’ After you are done with this, you need to file the required incorporation ( Incorporation document and Subscriber’s statement) based on the proposed LLP.

You will get an email if your proposed LLP has been approved.
File the LLP Agreement
Lastly, you need to fill out the initial LLP terms and conditions after the approval within 30 days. The information about the LLP agreement is to be filled and filed in Form 3 ( Information about Limited Liability Partnership Agreement and changes, if any, made therein).

How to convert an existing partnership into an LLP (Limited Liability Partnership)?

There is a separate e-form available on the official website for this. If you are a part of an already existing partnership firm, you need to fill out Form 17 called ‘Application and statement for converting a firm into LLP.’ Form 17 needs to be filled and submitted along with the pre-mentioned Form 2 (Incorporation document and Subscriber’s statement). All other steps are the same from step 1 to 4 as stated above.

How to convert an existing private or unlisted public company into LLP (Limited Liability Partnership)?

You can even convert an existing private company or an unlisted public company into an LLP. However, there is also yet another separate form needed to be filled out and submitted for this purpose. It is Form 18 called ‘Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP).’ All other steps are the same from step 1 to 4 as stated above.

You also need to fill out and submit (Incorporation document and Subscriber’s statement) along with Form 18.

How to start a Foreign Limited Liability Partnership (FLLP)?

To register for an FLLP (Foreign Limited Liability Partnership), you must fill out and submit Form 27 called ‘Registration of particulars by Foreign Limited Liability Partnership (FLLP)’ on the official website. All other steps are the same from step 1 to 4 as stated above. This e-form needs to be digitally signed and verified by the official representative of the FLLP.

For FLLP, you do not necessarily need to have a DIN or DPIN, although the official FLLP representative’s DSC is mandatory.

Documents Required in LLP

For LLP registration, you need a bunch of official documents and proof. We have listed them below for your convenience.

  • PAN Card: PAN Card (Permanent Account Number) copy of each partner in the proposed LLP (Limited Liability Partnership) is required. 
  • Identity & Address Proof: Acceptable Address proofs include
    • Passport
    • Election Card or Voter Identity Card
    • Telephone Bill
    • Aadhaar Card
    • Ration Card
    • Driving License
    • Electricity Bill
  • Residential Proof: The residential Proof is used to verify the address provided in the proposal. Acceptable Residential proofs include
    • Bank Statement
    • Electricity Bill
    • Telephone Bill
    • Postpaid Mobile Bill

If any Foreign National partners in the LLP are there, they must submit a separate set of proofs. 

  • Passport: A passport is mandatory as identity proof. It should also be Notarized or Apostilled in the country it was issued. If the language in the Passport is not English, It is to be officially translated into English and then submitted.
  • Address & Identity Proof: The acceptable Address Proof for foreign nationals include 
    • Driving License
    • Bank Statement
    • Residence Card
    • A government-issued form of identification that contains address.
  • Residential Proof: Additional verification of residential proof is also required. The acceptable proofs include:
    • Bank Statement
    • Electricity Bill
    • Telephone Bill
    • Mobile Bill

Costs Involved in LLP Registration in India

We have calculated the total cost required to register for an LLP for your convenience.

  • DSC: If you have two partners in the proposed LLP, the estimated cost for DSC registration is around Rs. 1500 to Rs. 2000.
  • Name Reservation: Rs. 200.
  • Incorporation: Incorporating the proposal largely depends on the Capital of the business:
    • For a Contribution up to Rs. 1 lakh – Rs. 500.
    • For Contribution between Rs. 1 lakh and 5 lakh – Rs. 2000.
  • LLP Agreement: It also depends on the Capital contribution. For a Contribution up to Rs. 1 lakh – Rs. 50 is needed for filling Form 3, and the stamp duty depends on the state where LLP is formed.

Limitations of Being an LLP

I have talked about the benefits above. Let’s talk about the limitations and disadvantages. It would help if you considered the disadvantages too before getting into an LLP.

  • Income through an LLP registered company provides personal income, and taxes are monitored and paid accordingly. Though taxing comes with certain advantages, it also depends on personal preference and circumstances.
  • LLP lets public disclosure of details and records related to your company. You have to submit the Financial records to Companies House for record-keeping purposes. These records contain income details that a lot of people are not comfortable disclosing.
  • Total profit made must be distributed amongst all partners, and you cannot hold on to profit to a future tax year. Thus retention of profit is prohibited.
  • The minimum member requirement for an LLP is two. So, if a member decides to leave the partnership due to any reason, the LLP is automatically dissolved.
  • If a foreigner wants to have an LLP in India, they need at least one Indian citizen as a partner.
  • LLPs also lack recognition. They are restricted by state policies, so many states may not recognize LLPs as an effective business structure. If you are serious about your business go for being a Company Name (Private Limited or LLC).

Conclusion

Any business planning has its pros and cons. The concept of LLP (Limited Partnership Liability) was introduced quite late in India. But over time, LLP has been recognized and accepted in the majority of states. LLP brings you the pros of a company and a partnership. It is especially great for small to medium-sized businesses. The Indian government supported the concept of LLP as it brought many tax benefits.

Moreover, LLP is a very easy form of business that is incorporated. Thus as of late, it has become very popular, and more and more companies and firms are proposing to convert into LLPs. In this guide, we have briefly discussed how to register for LLP while also informing you about its advantages and disadvantages, eligibility conditions, and document requirements.

If everything goes smoothly, your LLP registration should take around 15 days. With this guide’s help, you will be able to get a clearer idea about LLP and decide whether you want to convert your company into an LLP or not.

If you have some questions, ask me.

Gaurav Tiwari

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