What is Limited Liability Partnership (LLP) Registration

Limited Liability Partnership (LLP) registration is a popular choice for startups and small businesses, blending the features of a partnership and a private company. One key advantage is that LLPs require no minimum capital, making them accessible to new entrepreneurs. The process starts with selecting the availability of an unique business name, which is checked for availability using the RUN-LLP service on the Ministry of Corporate Affairs (MCA) portal.

To formally register, applicants have to submit a form on the MCA. The form provides the proposed name of LLP, the address of its registered office, and details of partners. Every partner should have either a Director Identification Number (DIN) or Designated Partner Identification Number (DPIN), and a Digital Signature Certificate (DSC) to electronically sign documents. Documents necessary are identification and address proof for partners and proof of the registered office address.

Once the business name is approved, the LLP agreement is prepared to establish roles, duties, and profit-sharing percentages between partners. The agreement is a document of internal governance of the LLP. After verification, the MCA delivers a Certificate of Incorporation officially identifying the LLP as an existing legal entity.

After incorporation, the LLP is required to open a bank account in its name and acquire PAN and TAN for tax purposes. Also, businesses can optionally register an MSME to avail government incentives for small businesses. LLPs provide management flexibility, individual assets, and have lesser compliance requirements compared to a private limited company, and hence are a popular choice for small businesses looking for a scalable, low-compliance setup.

Limited Liability Partnership Act, 2008

This Act make provisions for the formation and regulation of limited liability partnerships and for matters connected therewith or incidental thereto

Limited Liability Partnership in Company Law

As per Company Law, Limited Liability Partnerships (LLPs) is an unique entity offering limited liability protection to its partners. LLPs have a separate legal status while maintaining operational flexibility akin to partnerships. This framework under the LLP Act, 2008, facilitates streamlined registration and operational processes for businesses in India.

What Are the Key Features of a Limited Liability Partnership?

Limited Liability Partnerships (LLPs) combine the benefits of a company and a partnership structure. They offer limited liability to partners and a flexible internal management framework. Here is the detailed list of the main features of the same:

• Legal Status of LLPs: LLPs enjoy separate legal personality status, independent of their partners, to hold assets, contract, and sue or be sued in their name.

• Flexibility in Management: Flexibility in management structure and decision-making is provided through LLPs. Partners can either manage the LLP themselves or designate specific managers or committees for particular functions.

• Liability Protection: LLP members have limited liability, such that their private property is protected against the debts and liabilities of the LLP. Only to the extent of the contribution agreed by them are the partners liable.

• Minimum Compliance Requirements: Compared to companies, LLPs have fewer compliance requirements. They are exempt from the requirement of holding annual general meetings (AGMs) or keeping extensive statutory records, thus reducing administrative hassles.

• Taxation Advantages: LLPs are taxed as a partnership, and the profits are received by the partners who are taxed individually. It prevents double taxation that is seen in case of companies where both the company and shareholders are taxed.

• Perpetual Succession: LLPs possess perpetual succession, and it means that the LLP remains in existence even if there is a change in partners through retirement, resignation, or death. The existence of the LLP will not be impacted due to changes in its membership.

• Ease of Transferability: LLP interests are transferable with ease, depending on the LLP agreement. This makes changes in investments and ownership possible without interfering with the operations of the LLP

What are the Benefits of Registering my LLP

Advantages of LLP registration are limited liability protection, flexibility in management, tax benefits, and the ease of meeting regulatory requirements. Some of the advantages are:

Limited Liability: LLP registration provides partners with limited liability of the partners, protecting personal assets from business debts and liabilities.

Separate Legal Entity: LLP has a separate legal entity, which enables it to enter contracts, own assets, and sue or be sued in its own name independently of its partners. It is suitable for startups.

Flexible Management Structure: LLPs allow the terms of management and operations to be structured according to the LLP agreement, wherein the partners have freedom to determine roles, duties, and decision-making terms.

Minimum Compliance Burden: LLPs have less compliance compared to companies, minimising the administrative costs and burdens. LLPs are exempted from the requirement of holding annual general meetings (AGMs) and also have lessened audit requirements.

Tax Efficiency: LLPs are subject to taxation as partnerships, and profits are shared with partners at their respective tax slabs. Double taxation of company profits and dividends is thus circumvented.

Perpetual Succession: LLPs have perpetual succession, meaning continuity despite the change in partners through retirement, resignation, or death.

Easy Transferability of Ownership: Transfer of interests in an LLP is made easy as per the LLP agreement, allowing for change in ownership and investment without impacting the LLP operations.

Credibility and Trust: Registration as an LLP increases credibility and trust with stakeholders, such as clients, suppliers, and investors, through its established legal status and limited liability format.

Access to Funding: LLP registration enhances access to finance and funding sources, such as bank loans, venture capital, and government schemes, improving growth potential.

Global Recognition:LLPs are globally recognised, making it easier for companies to expand outside their home countries and collaborate with foreign companies under bilateral and multilateral arrangements.

LLP Incorporation Checklist

After registering your LLP you must follow certain important compliances and process requirements that have to be followed after registering an LLP. Here is a detailed outline for the same:

• Pre-Filing Requirements

  It is essential to fulfill the following requirements prior to filing for LLP incorporation:

  • Name Reservation: Select a distinct name for the LLP and reserve the name with the Registrar of Companies (ROC). Name approval is fundamental for LLP registration.

  • Partnership Agreement: Draft an LLP agreement specifying roles, duties, profit-sharing, and decision-making among partners.

  • Partner Identification: Get Digital Signature Certificates (DSC) of all partners who are going to be part of the LLP.

  • Registered Office: Give evidence of the registered office address of the LLP.

• Filing Processes

  Proceed with the below steps for filing incorporation of LLP:

  • Document Preparation: Prepare documents required such as LLP agreement, identity proof, address proof, and partners' consent

  • Form Submission: Complete and file Form 2 with the ROC along with the documents and fees

  • Verification: ROC authenticates documents and approves the application for incorporation of LLP

  • Certificate Issuance: On approval, ROC issues the Certificate of Incorporation, which records the legal existence of the LLP.

• Post-Filing Compliance

  Post-LLP incorporation, be in compliance with continuing requirements:

  • LLP Agreement Registration: File the LLP agreement with the ROC within 30 days of incorporation

  • PAN and TAN Application: Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the LLP

  • Annual Compliance: File annual returns and maintain financial records as per LLP Act requirements

  • Changes in LLP: Notify ROC of any changes in partners, addresses, or LLP agreements through prescribed forms.

Documents Required for LLP Registration in India

In order to register a Limited Liability Partnership (LLP) in India, the following documents are generally required:

• Identity Proof of Partners:

  PAN Card (Indian Nationals) or Passport (Foreign Nationals)

  Aadhaar Card or Voter ID Card

  Passport photograph

• Address Proof of Partners:

  Aadhar Card or Voter ID Card

  Passport or Driving License

  Utility bills (electricity bill, water bill, gas bill or telephone bill) which are not older than 2 months

• Registered Office Proof:

  Rent agreement or lease deed (if rented)

  Property receipt or ownership deed (in case of ownership)

  NOC (No Objection Certificate) from the landlord (in case of rent)

• Partnership Agreement (LLP Agreement):

  Duly drafted LLP agreement defining roles, responsibilities, share in profit, and decision-making

  among the partners.

• Digital Signature Certificates (DSC):

  DSC of all the partners seeking LLP registration.

• Consent of Partners:

  Consent of every partner to be partners of the LLP in Form 9.

• Form for LLP Registration:

  Form 2: Incorporation application for LLP, and partner details, registered office address, LLP agreement, etc.

• Declaration by Designated Partners:

  Declaration in Form 1 of LLP for fulfillment of all LLP incorporation requirements.

• Other Optional Documents (if necessary):

  Professional qualification proof (where the designated partners are professionals)

  Certificate of incorporation or registration (where the partners are corporate bodies)

Charter24's LLP Registration Process

At Charter24, we make the LLP registration process simple and easy so that our clients can focus on their business. Here's how our LLP registration process generally goes:

• Step 1: Consultation and Planning

  Our professionals talk with you about your business needs and goals to find the most appropriate LLP structure.

• Step 2: Name Reservation

  We conduct a thorough name availability search and reserve a unique name of the LLP that complies with regulatory guidelines. Our team will file the RUN-LLP for the same.

• Step 3: Document Preparation

  Our team assists in drafting the LLP agreement, outlining partner roles, profit-sharing, and operational procedures according to your specifications.

• Step 4: Digital Signature Certificates (DSC)

  We arrange for the issuance of Digital Signature Certificates (DSC) for all the partners of the LLP.

• Step 5: Filing with Registrar of Companies (ROC)

  We draft and file Form 2 (application for incorporation of LLP) and other documents with the ROC on your behalf.

• Step 6: Verification and Approval

  Our professionals coordinate with the ROC to check the documents submitted and confirm LLP Act compliance.

• Step 7: Certificate of Incorporation

  On approval of registration of the company, we receive the Incorporation documents from the ROC to confirm the legal existence of your LLP.

• Step 8: Post-Incorporation Compliance

  We help you get PAN and TAN for your LLP, register the LLP agreement, and maintain ongoing compliance with regulatory filings.

• Step 9: Additional Services

  Charter24 offers continuous support for annual compliances, trademark registration, professional tax, proposed LLP structure changes, and other legal compliances to facilitate you in running and expanding your business smoothly.

Annual Filings for Limited Liability Partnership

• Financial Statements

  • LLPs must prepare and file financial statements once a year. The financial statements are:

  • Statement of Accounts: Contains Balance Sheet, Profit and Loss Account, and Cash Flow Statement.

  • Statement of Solvency: Required to be filed by LLPs having a turnover of more than ₹40 lakhs or capital contribution of more than ₹25 lakhs.

• Annual Returns

  • Annual returns are to be filed by LLPs with the Registrar of Companies (ROC). The annual return contains such information as:

  • Statement of Account:Filed with the ROC within 30 days from the close of six months from the financial year.

  • Annual Return Form: Filed within 60 days after the financial year closes.

• Audit Requirements (if any)

  • Audit requirements of LLPs are based on their turnover and capital contribution:

  • Audit Requirement: LLPs with a turnover above ₹40 lakhs or capital contribution above ₹25 lakhs must obtain their accounts audited by a Chartered Accountant.

  • Exemption: Small LLPs (whose turnover is not more than ₹40 lakhs and whose capital contribution is not more than ₹25 lakhs) are exempted from audit.

Taxation of Limited Liability Partnerships

Limited Liability Partnerships (LLPs) are taxed differently than regular corporations. The following is an overview of how LLPs are taxed:

LLPs are treated as pass-through entities, just like partnerships. This implies that LLPs do not pay taxes at the corporate level. The profits or losses are instead passed through to the partners, who report them on their personal income tax returns. The partners are assessed at their respective individual income tax rates that apply to their respective income ranges.

LLPs need to file an LLP Return of Income (Form ITR-5) with the Income Tax Department every year. The form contains income, deductions, and other financial details in relation to the tax liability of the LLP. LLPs can also be liable for other compliances to taxes based on their business and turnover.

Public Limited Company Registration

In India, a Public Limited Company (PLC) is a business structure suited for large-scale operations. Entrepreneurs who are planning for large-scale business operations can start a Public Limited Company registration in India. Unlike private companies, PLCs can raise funds from the general public by offering shares on stock exchanges. This allows them to access a wider pool of capital for growth. A Public Limited Company in India enjoys all the privileges of a corporate entity together with the features of Limited Liability. Entrepreneurs and aspiring business owners must understand what is public limited company and the registration process to obtain all the benefits.

IndiaFilings can help you start your public limited company in India with ease and efficiency. Our comprehensive services cover everything from company registration to compliance management, ensuring a smooth and hassle-free setup process for your business.

What is Public Limited Company in India?

A public limited company meaning defined by its unique function, which is a form of corporate entity that permits the general public to hold ownership stakes through publicly traded shares. These shares are commonly exchanged on established stock markets, enabling a diverse group of brokers, investors, and traders to buy and sell equity. This structure allows individuals from various backgrounds to invest and hold shares in the company.

Unlike private companies, public limited companies are governed by stricter regulatory and reporting standards. In India, the law governing public limited companies is primarily outlined in the Companies Act of 2013. The public company minimum members is 7, and there is no limit on the maximum number of members /shareholders for starting a Public Limited Company.

The day-to-day operations are managed by an executive team, but the broader ownership lies with the many shareholders who invest in the companys stock. These shareholders typically have voting rights that include the ability to vote on the election of the board of directors. The board then selects the executive team tasked with managing the company's ongoing business affairs. It is important to remember to meet the minimum shareholders in public company to proceed in the functions.

Types of Private Limited Companies:

Entrepreneurs or prospective businessmen must consider the following types of private limited companies, if they intend to start company or undertaking the business registration in India,

• Company Limited by Shares: Shareholders' liability is limited to the nominal share amount mentioned in the Memorandum of Association.

• Company Limited by Guarantee: Member liability is limited to the amount of guarantee specified in the Memorandum of Association. This guarantee is invoked only during winding up.

• Unlimited Companies: Members of unlimited companies have unlimited personal liability for the company's debts and liabilities. However, they are still considered a separate legal entity, and individual members cannot be sued.

Ensure you deeply understood these types before proceeding to the business registration in India.

Key Characteristics of a Public Limited Company

Below are the fundamental characteristics of a public limited company:

• Board of Directors: According to the Companies Act, a public limited company must appoint at least three directors, with no upper limit on the number. The board of directors plays a crucial role in governing the company's management and strategic decision-making.

• Company Name: It is a legal requirement for all public limited companies to include the word "Limited" in their company name. This designation indicates that the company is legally a public entity, capable of trading shares on the stock market and open to investment by the public.

• The Company's Prospectus: Public limited companies are required to prepare and issue a prospectus. This document offers a detailed look at the company's operational activities and financial health, providing essential information to potential investors and aiding their decision-making process.

• Paid-Up Capital: While the Companies Act stipulates various regulations for public limited companies, it does not impose a minimum initial share capital requirement for registration. This absence of a specified minimum allows companies the flexibility to set their capital structure according to their specific needs and strategic objectives.

Types of Public Limited Company

Public limited companies are broadly categorised into two distinct types:

Listed Company

This type of public limited company has its shares actively listed and available for trading on one or more stock exchanges. This accessibility allows the public and various financial entities to buy and sell the company's shares, providing greater liquidity and exposure to a diverse pool of investors.

Unlisted Company

Unlike its listed counterparts, an unlisted public limited company does not have its shares traded on any stock exchange. As a result, its shares are not as easily transferable, and the company does not experience the same level of public scrutiny or regulatory requirements as a listed company. This category of public limited company may appeal to businesses seeking to benefit from a broader base of shareholders while avoiding the complexities of full public trading.

Advantages of Public Limited Company Registration

Registering as a public limited company brings several key benefits:

• Easier Access to Capital: These companies can raise funds by selling shares to the public, which provides a major boost in capital and makes it easier to fund expansion projects.

• Financial Flexibility: Public limited companies can raise money using a variety of financial options, thanks to strict regulations that give investors confidence in their investments.

• Limited Liability: The shareholders of a Public Limited Company are given limited liability protection. In a situation of unexpected liability, the same would be limited only to the company and would not affect the shareholders in any way.

• Growth Opportunities: Going public can help smaller companies grow by providing the funds needed for expansion and improving operational efficiency due to increased accountability.

• Flexibility in Shareholder Structure: While the Public company minimum members are 7 shareholders, there is not upper limit for maximum members.

• Easy Share Trading: Shares of public limited companies can be bought and sold easily on the stock market, which attracts more investors and makes it simpler for existing shareholders to sell their shares if they choose.

These benefits make public limited companies attractive for businesses looking to expand and attract investment.

Public Limited Company Registration Procedure

Public limited company registration involves several structured steps that adhere to regulatory requirements. Here is a detailed guide to the procedure:

Step 1: Obtain Digital Signature Certificates (DSC)

Before starting the registration process, obtain Digital Signature Certificates (DSC) for all proposed directors and subscribers to the memorandum and articles of association. DSC is essential for filing the forms online on the Ministry of Corporate Affairs (MCA) portal.

Step 2: Apply for Director Identification Number (DIN)

Each proposed director must have a Director Identification Number (DIN). This can be applied for using the SPICe form, which also simplifies the application process. You need to provide proof of identity and address as part of the DIN application.

Step 3: Check Company Name Availability

Use the MCA online portal to check if your desired company name is available. It is important to ensure that the name does not infringe upon any existing trademarks or is not already in use. This step is crucial as it establishes the unique identity of your company.

Step 4: File SPICe+ Form

Once the name is approved, proceed to file the SPICe+ form. This comprehensive form is designed to cover all legalities for the incorporation of a company. Along with this form, you will need to submit the Memorandum of Association (MOA) and Articles of Association (AOA), which detail the constitution and rules governing the management of the company.

Step 5: Certificate of Incorporation

After the submission of the SPICe+ form and necessary documents, the Registrar of Companies (ROC) will review the application. Upon successful verification, the ROC issues a Certificate of Incorporation. This certificate is a legal document that marks the birth of the company and includes the company's Corporate Identification Number (CIN) and the date of incorporation.

Step 6: Apply for PAN and TAN

With the incorporation certificate in hand, the next step is to apply for the company's Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). These are essential for all tax-related transactions and compliances.

Step 7: Open a Company Bank Account

Finally, open a bank account in the name of the company. You will need the Certificate of Incorporation, MOA, AOA, PAN, and other relevant documents to set up the bank account. This account will handle all monetary transactions of the company.

Basic

Standard

Rs.20,499
Plus taxes

• Company name precheck

• Certificate of Incorporation

• PAN & TAN

• 3 DIN

• MOA & AOA

• Current Bank Account

(3 Indian Directors, 7 Shareholders and Authorised Capital of Rs. 5,00,000)

Let's Start

Rs.25,499
Plus taxes

• Company name precheck

• Certificate of Incorporation

• PAN & TAN

• 3 DIN

• MOA & AOA

• Current Bank Account

• PF & ESIC Registration

• GST registration

• Commencement of Business

• Auditor Appointment (ADT-1)

(3 Indian Directors, 7 Shareholders and Authorised Capital of Rs. 5,00,000)

Let's Start