Limited Liabilities Partnership Incorporation

Secure and Streamline Your Business with LLP Incorporation

Transform your business with the flexibility and security of a Limited Liability Partnership (LLP) in India! Enjoy the best of both worlds with the benefits of a partnership and the limited liability of a corporation. LLPs offer ease of management, minimal compliance, and protection for your personal assets. Perfect for professionals, entrepreneurs, and growing businesses, LLPs pave the way for sustainable growth and success. Register now and take your business to new heights with an LLP!

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Limited Liabilities Partnership 

In INDIA, partnership firms are formed under the partnership act of 1932. Such partnerships can be registered with the Registrar of firms or can operate as unregistered as well as there is no penalty for unregistered partnership, However, in case of an unregistered partnership, a partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act. Hence it was not advisable for businesses to operate as unregistered firms. Also, there was no transparency in the partnership firm from the viewpoint of stakeholders.

Concept of LLP came into force in 2008 which provided a solution to all problems and hurdles faced by partnership firms registered under the partnership act,1932. Limited liability partnership (LLP) is a body corporate governed by The Limited Liability Partnership Act, 2008(LLP Act). LLP means an association of a minimum of two individuals, body corporate, or any combination of such. LLP has a separate entity from its partners and enjoys perpetual succession like a private limited company.

Advantages Of Registering An LLP

  1. Easy to form

Forming an LLP is an easy process in comparison to a private limited company.

  1. Limited liability

Limited liability in the case of LLP means that partners are not personally liable for the company’s debts. Additionally, no partner is responsible for the misconduct of any other partner.

  1. Perpetual Succession

An LLP enjoys perpetual succession and is not affected by death, insolvency, or retirement of a partner.

  1. Easy transferability of ownership

There is no restriction as to the addition and removal of partners as the shares are easily transferable.

  1. Taxation

An LLP is not subject to DDT (Dividend Distribution Tax), Distributed profits are not taxable in the hands of partners.

  1. No Compulsory audit

LLP, unlike companies, are not required to appoint an auditor unless the turnover increases by 40 lacs annually and contribution exceeds 25 lakhs.

  1. Less compliance requirement

An LLP is much easier and cheaper as compared to a private limited company as there are only 3 compliances which we need to do every year. On the other hand, a private limited company needs to file many compliances with ROC.

  1. Easy wind-up

Not only it’s easy to set up an LLP it’s also relatively easier to close an LLP in comparison to a private limited company.

Disadvantages Of LLP

  1. Restricted Access to capital markets

LLPs are a small form of business and cannot get themselves listed on any stock exchange, hence they cannot raise capital through IPO’s (Initial public offering).

  1. Public Disclosure of LLP Information

An LLP must file its Annual Returns, Financial Statements, etc. to the Registrar of LLPs annually. Which becomes a public document once filed with the Registrar of LLPs and may be inspected by the general public including competitors by paying some fees to the Registrar of LLPs.

  1. Limitation in External Commercial Borrowings (ECB)

Limited Liability Partnerships are not allowed to raise ECB. Therefore, an LLP cannot avail commercial loans from its foreign partners, FIIs, Foreign Banks, and any financial institution located outside India.

So, whether you need to incorporate an LLP, a normal partnership firm or any other business format will entirely depend upon your specific industry and your future vision. Tech Munshi offers free business advice for making such important decisions by evaluating your current and future needs.

Our comprehensive suite of professionals caters to a diverse team, ranging from seasoned architects to renowned engineers.

Procedure For the Incorporation Of LLP

Tech Munshi offers 100% online registration of LLP. After verifying your documents, we will immediately start preparing documents like DSC, DPIN, AOA, MOA, etc. to be filled with MCA. Here is a brief about registering an LLP.

The incorporation document shall be filed in Form FiLLiP (Form for incorporation of Limited Liability Partnership)

  1. Procure DSC and DPIN

Procure DSC and DPIN for the individuals acting as Designated Partners of LLP. A person, who already has a DPIN, is not required to obtain any new DPIN. Existing DPIN to be used for Designated Partner (However, DPIN should have all the latest details such as a resident of India, name, address, etc.).

  1. Name reservation

The first step in the incorporation of an LLP is the reservation of the name of the proposed LLP. There are two ways of reserving the name of the proposed LLP.

  • File an application under LLP-RUN for ascertaining availability and reservation of the name of an LLP
  • Name can be proposed in e-form FiLLiP, an application for incorporation of LLP
  1. Incorporate LLP

After reserving a name under LLP-RUN, the applicant should file e form FiLLiP for incorporating a new LLP.

  1. Documents to be attached with form LLP
    • Consent of partners;
    • In case of partners are body corporates, certified true copy of board resolution passed by such body corporate partners;
    • Proof of address of registered office of LLP
    • Subscribers’ sheet including consent
    • Details of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner
    • Copy of approval obtained from any sectoral regulator/in-principal approval
    • Identity and address proof of individuals acting as Partner and/or Designated Partner
    • List of main objects of an LLP
    • If the name proposed is likely to be a registered trademark, NOC from the trademark owner
    • NOC of foreign body corporate for the usage of the name (In case of foreign entities intending to incorporate LLPs in India)
  2. Drafting of LLP agreement
    • After incorporating LLP, we will draft an LLP agreement between the partners after taking inputs from each partner and file the same with ROC.

How to prepare LLP agreement?

  1. Draft the agreement and print it on a Stamp paper of requisite value. Value of Non-judicial Stamp Paper depends on the state in which Registration of LLP is done and on the amount of capital contribution.
  2. All partners should sign the agreement at the bottom of all pages
  3. Two witnesses should sign the agreement at the end of the document
  4. Each partner should be provided with a copy of the agreement

Essential points to include while preparing LLP document.

  1. INTERPRETATION / DEFINITIONS
    This clause is the essence of any LLP agreement. An LLP Agreement must provide for various definitions such as the definition of designated partners, the accounting period, the business of LLP, and the name with which the LLP will be known. The agreement must also provide with full address of the registered office of the LLP as well as the address of all the partners.
  1. The designated partners-LLP agreement should clearly state the name, address, and age of designated partners.
  2. Name of the LLP
  3. The registered office of LLP
  4. Business of LLP
  5. Capital contribution
  6. Profit-sharing ratio
  7. Rights and duties of designated partners
  8. Clauses relating to admission, retirement, insolvency, death of a partner
  9. Remuneration and interest to be paid by partners.
  10. Bank accounts and their handling
  11. Books of accounts and accounting year
  12. Meetings of partners
  13. Indemnity Bond
  14. Dispute resolution
  15. Winding up of LLP/Term of LLP