Are you considering registering your startup as a Limited Liability Partnership (LLP)? If so, you’re on the right track to enjoy a smoother registration process and reduced compliance burdens compared to a Private Limited Company registration. Register Your LLP with DSC, DIN, COI , LLP Agreement, PAN Card and TAN Number. Contact us to start the process.
For a Startup that has special requirements, we can customize your package in following cases
A Limited Liability Partnership (LLP) is a legal entity that combines the features of a traditional partnership and a private limited company. It offers limited liability protection to its partners while allowing them to have flexible management and operational structures. LLPs are governed by the Limited Liability Partnership Act, 2008, in India.
A Limited Liability Partnership is a distinct legal entity that provides its partners with limited liability protection. This business structure is widely favored due to its flexibility and ease of operation. In an LLP, partners have the freedom to manage the business collectively while enjoying limited personal liability for the company’s debts and obligations.
To Register a LLP in India we require atleast two persons to act as the initially designated partner in the LLP. There is no limit on the maximum number of partners.
One Designated Partner of the LLP should be resident in India. A Person is considered a resident when it stays in India for over 182 days during the previous financial year.
To Incorporate a LLP, you must should have one premises where registered office of llp will get registered. we require the proof of the registered address not older than 2 months and the NOC from the registered address owner.
The LLP Act does not prescribe any minimum or maximum capital as such; hence you may keep the capital/contribution of the LLP as per the LLP Business requirement.
LLP may have partners varying from 2 to many. There is no limit for partners in LLP. An LLP requires a minimum 2 partners while there is no limit on the maximum number of partners in contrast to a private company wherein there is a restriction of not having more than 200 members.
LLPs are not required to audit the accounts. Any other company (Public, Private) are mandated to get their accounts audited by the auditing firm. LLP is required to audit their account when the contributions of the LLP exceeds Rs.25Lac, or When annual turnover of the LLP exceeds Rs.40Lac
LLP have to face less compliance burden as they have to submit only two statements i.e. the Annual Return & Statement of Accounts and Solvency. Whereas in the case of private company, at Least 8 to 10 regulatory formalities and compliances are required to be duly completed. Read Annual Cost Comparison of Private Limited and LLP.
LLP is not liable to pay the tax on the income and share of its partner. Thus, no dividend distribution tax is payable as under section 40(b). Bonus, commission or remuneration, Interest to partners, any payment of salary, allowed as deduction. Provision of ‘deemed dividend’ under income tax law, is not applicable to LLP.
The partners of the LLP have limited liability which means partners are not liable to pay the debts of the LLP from their assets. No partner is responsible for any other partner’s misconduct.
Forming LLP is an easy process. It is less complicated and time-consuming unlike the process of formation of a company. We help startups to start their LLP quickly in online mode.
The LLP Being a separate legal person, its life or existance is independent of the partner’s death, retirement, or insolvency. The LLP will get wound up only as per provisions of the LLP Act.
The relationship between the partners is governed by an LLP Agreement, which can be easily amended to introduce or retire a partner. The process is easy and straight forward.
Under the LLP Act, the statutory audit is not mandatory for small LLP. However, the statutory audit becomes compulsory only when the annual turnover and of LLP cross Rs 40 Lakh or the LLP Capital is more than 25 Lakh.
The compliance requirement for an LLP is fewer in comparison to a company. Also, the annual return filing is easy and cost-effective. The LLP has to file its ITR just like any other business and file ROC Annual Returns.
LLP registration procedure starts with documentation of the proposed designated partners/partners and relating to the registered address of the LLP. Ensure that the documents are updated and correct. The mandatory information and documents for LLP Incorporation to be provided to us in the online questionnaire.
The Name of the LLP should be cross-checked with the ROC and the trademark registry to avoid any infringement of someone else Trademark or Other Company /LLP Name. Check Name Availability or contact us.
DSC is equivalent to the physical or paper signature under the information technology act. For LLP registration, all the applications to ROC are filed in digital format signed by designated partners of the LLP. The filing process starts with the issue of a digital signature for all the partners of the LLP.
The application for the Name approval of LLP is submitted in FormForm RUN-LLP. It is a web-based application, where two names in order of preference can be filed with a note on the significance of the Name and the business activities.
The application of New LLP Registration is filed in FILIP Form immediately after name approval. The partners KYC documents and proof of the registered address are submitted along with the application form. The Form, FILIP, is attested by a practising Chartered Accountant, Company Secretary, Cost Accountant, or an Advocate practising at High Court. The government filing fee for the registration of depends on the proposed capital/contribution of the LLP.
The LLP registration’s final stage is the Certificate of Incorporation for the LLP after the verification of the application for LLP Registration is filed in Form FILIP. The issuance of the registration certificate of LLP is conclusive proof of the LLP registration by ROC.
Post-registration of the LLP, the partners need to enter into a valid agreement on stamp paper of appropriate value as per respective state. The LLP agreement defines the mutual rights and duties of the partners, and the LLP Agreement should be signed before a notary public. The duly signed & Notary Attested LLP Agreement is then filed with ROC in Form -3 within 30 days of the LLP Incorporation.
The LLP needs to apply in the prescribed Form 49A to the income tax department for the allotment of PAN; the acknowledgement of the pan application for the LLP is received on the same day. However, the pan is allotted within a week. TAN number is a permanent number assigned to business for complying with withholding tax provisions (TDS). You are required to deduct TDS while making payments; hence, the next step is to obtain a TAN number, which is mandatory to submit TDS Returns.
Sr. No. | Particulars | Rate |
|---|---|---|
1 | Income Tax | 30% on the profits of LLP |
2 | Surcharge | 12% on the Income Tax, if the taxable income is more than one crores. |
3 | Health and Education Cess | 4% on the amount of Income Tax and Surcharge (if any) |
4 | AMT | Alternative Minimum Tax: The LLP can not pay less than 9% Plus Cess of the adjusted total income U/s 115 JC |
Limit on Partner Remuneration: The LLP Can pay remuneration to its Working Partners Only, subject to a specific clause regarding the payment of compensation to the partner. However, such managerial remuneration should be within the prescribed limit under the Income Tax Act.
Sr. No. | Book Profit | Amount Allowed as Remuneration U/s 40B |
|---|---|---|
1 | Up to 3 Lakhs of book Profit. | 1.5 Lakh or 90% o the Book Profit Whichever is higher |
2 | On Excess of Rs. 3,00,000/- | 60% of the Book Profit after the first Rs. 3 Lakhs. |
The LLP Has to file Income Tax and ROC Return every year. Here is a brief note on the annual compliance.
| S.No | Annual Filing | Particular |
|---|---|---|
|
1. |
Account Finalisation |
At the end of the FY, the LLP must finalise their books of account and prepare a statement of income and expenditure and the balance sheet in compliance with the LLP Act and the Income Tax Laws. |
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2. |
Statutory Audit |
A statutory audit is not required for small LLP. However, it becomes mandatory when the turnover of the LLP is over Rs. 40 Lakhs or the Capital of the LLP is more than Rs 25 Lakh |
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3. |
Income Tax Return |
Every year the Income Tax for the LLP is filed as per the following due dates.
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4. |
Form 11 |
Form 11 is the annual return of the LLP to the Registrar of Companies and is mandatory filing before the 30th of May of the next year for every financial year. |
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5 |
Form 8 |
The LLP need to file their financial information and a statement of solvency to the ROC in form 8. The last date of filing Form 8 is 30th October for the previous financial year. |
Features | Private Limited Company | OPC | LLP | Partnership | Sole Proprietorship |
|---|---|---|---|---|---|
Applicable Law | Company Act 2013 | Company Act 2013 | LLP Act 2009 | Partnership Act 1932 | No Law |
Number of members | 2 - 200 | 1 | 2 - Unlimited | 2 - 20 | 1 |
Number of Directors /DP | 2 - 15 | 1-15 | 2 - Unlimited | 1-20 | 1 |
Formation | Through ROC | Through ROC | Through ROC | Through Agreement | Easy |
Tax Benefits | The income tax rate for companies vary from 15 % to 22% | The income tax rate for companies vary from 15 % to 22% | LLP Income Tax Rate is 30% on its profits | Partnership firms are taxed at 30% on its profits | For a small business with low turnover, there is the benefit of individual tax slabs. |
Statutory Compliance | High | High | Low | Low | Minimum |
Foreign Investment (FDI) | FDI in case of a Private Limited Company is available under the automatic route. | FDI is not allowed in One Person Company | FDI in LLP Is permitted at par with the companies | FDI not Allowed | FDI not Allowed |
Separate Legal Entity | A Company is a separate legal entity separate from its promoters | An OPC is a separate legal entity separate from its promoters | An LLP is a separate legal entity separate from its promoters | A Partnership is a legal entity but not different from partners | The proprietor and the proprietorship business is the same thing |
Limited Liability | Liability Limited - Shareholders of a Company are bound to pay only up to the capital they have subscribed to the company. | Liability Limited - In OPC, unlike a proprietorship, the shareholder cannot be asked to pay beyond his subscribed capital | Liability Limited - The partners of an LLP can be called upon to pay only up to the amount of capital they subscribed to. | Liability Not Limited - There is no protection of limited liability, even the personal properties of partners are at risk for losses of business | Liability Not Limited - The proprietor is the whole sole of the business, and his liability to the debts or losses of proprietorship is unlimited. |
Ownership Transferability | The shareholding of a Pvt Ltd Company is easily transferable | OPC Shares can be transferred to new shareholder along with the nominee | In LLP contribution/share of a partner can be transferred with the consent of all other partners. | Not Possible, every admission or removal of a partner amounts to the new firm. | Not Applicable |
Perpetual Existence | A Company exists beyond the life of its owners /shareholders. After the death, the shares transmits to legal heirs | OPC Continues to exist even after the death of its only shareholder, as it passes to the nominee. | The LLP also have perpetual existence and exists beyond the life of the designated partner | No perpetual existence, with the death of a partner, the partnership ends. | No perpetual existence, with the death of the proprietor, it ends. |
A Limited Liability Partnership must have a minimum of two Partners and an LLP can have any number of Partners.
An LLP can be started with any amount of money there is no such minimum requirement. A partner may contribute both tangible or intangible property.
Any individual, or even a company or an LLP, can become a partner. However, only an individual can become a ‘designated partner’ in an LLP.
The time taken for incorporation depends on the submission of relevant documents by the client as well as the Approvals from the Government authorities. setupfiling can help you Incorporate an LLP in 7-14 days.
Yes, non-resident Indians and foreign nationals who are willing to enter into an LLP partnership can do so, provided they submit the necessary documents after getting them notarized by the concerned authorities. Although, at least one of the designated partners in an LLP should be an Indian national.
An LLP agreement is made between the partners and the LLP regarding the relationship between the individual partners in the LLP. An LLP agreement usually consists of management policies, the inclusion of new partners, policy-making strategies, and so on.
Typically, only start-ups that will not be looking for venture capital funding register LLPs. This is because venture capitalists only invest in private and public limited companies.
