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LLP Registration

Limited Liability Partnership (LLP)

Limited Liability Partnership is a new corporate structure that combines the flexibility of a partnership and the advantages of LLP Registration at a low compliance cost. In other words, it is an alternative corporate business vehicle that provides the benefits of LLP Registration, but allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm. Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular. Internationally, LLPs are the preferred vehicle of business, particularly for service industry or for activities involving professionals.

How to incorporates a LLP

  • Minimum 2 designated partners
  • Minimum Capital must decide upon the Designated Partners
  • DPIN for all the Partner
  • Digital Signature for all the Partners
  • Consent From Designated Partner
  • Proof of Registerred Address.

Documents Required

  • Colour Photograph for each Designated Partner
  • Pan card
  • Address Proof
  • Signature on Digital Signature Form
  • Signature on Subscriber Sheet & Consent Statement

The time required to  Register LLP Company depends on documentation, availability of digital signature and name approval of the company. we normally take to complete the incorporation process within a period of 15 Days.

  • The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
  • The mutual rights and duties of partners of an Limited Liability Partnership inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act 2008 . The act provides flexibility to devise the agreement as per their choice.
  • The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the Limited Liability Partnership which may be of tangible or intangible nature or both tangible and intangible in nature. No partner would be liable on account of the independent or unauthorized actions of other partners or their misconduct. The liabilities of the LLP and partners who are found to have acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP.
  • Every Limited Liability Partnership Company shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.
  • The LLP company shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
  • The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
  • The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act 2008.
  • A firm, private company or an unlisted public company is allowed to be converted into LLP in accordance with the provisions of the Act. Upon such conversion, on and from the date of certificate of registration issued by the Registrar in this regard, the effects of the conversion shall be such as are specified in the LLP Act. On and from the date of registration specified in the certificate of registration, all tangible (moveable or immoveable) and intangible property vested in the firm or the company, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, and the whole of the undertaking of the firm or the company, shall be transferred to and shall vest in the LLP without further assurance, act or deed and the firm or the company, shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be.
  • The winding up of the Limited Liability Partnership may be either voluntary or by the Tribunal to be established under the Companies Act, 1956. Till the Tribunal is established, the power in this regard has been given to the High Court.
  • The LLP Act 2008 confers powers on the Central Government to apply provisions of the Companies Act, 1956 as appropriate, by notification with such changes or modifications as deemed necessary. However, such notifications shall be laid in draft before each House of Parliament for a total period of 30 days and shall be subject to any modification as may be approved by both Houses.
  • The Indian Partnership Act, 1932 shall not be applicable to LLP

Conversion From Private Limited Company Into Limited Liability Partnership [Section 56]: A Private Company may Convert into a Limited Liability Partnership in accordance with the provisions of this Chapter and the Third Schedule.

  • A company may convert into a limited liability partnership by complying with the requirements as to the conversion set out in this schedules.
  • A company may apply to convert into a limited liability partnership in accordance with this schedule if and only if- (a.) There is no security interest in its assets subsisting or in force at the time of application; (b.) The partners of the limited liability partnership to which it converts comprise all the shareholders of the company and no one else.
  • Upon such conversion the company, its shareholders, limited liability partnership into which the company has converted and the partners of that limited liability partnership shall be bound by the provision of this schedule that are applicable to them.
  • Deciding the Partners and Designated Partners
  • Obtaining DPIN No. for Designated Partners by filling Form 7 & Digital Signature
  • Application for conversion of Company to LLP in Form 18
  • File the following forms along with a statement by all partners with registration
  • Number and date of registration of the firm.
  • Form 2: Details of partners, registered office etc
  • Form 4: Consent of Partners – Consent of each partner to become a partner of Liability Partnership
  • Form 3: LLP agreement – this can be filed within 30 days from the date of registration
  • After verification, registrar will register all documents and issue Certificate of registration Upon registration of Limited Liability Partnership, file an intimation to the Registrar of Companies in Form- 14 stating the fact that the company is converted into LLP.

Automatic Transfer: All the assets and liabilities of the firm immediately before the conversion become the assets and liabilities of the company.

  • No Stamp Duty: All movable and immovable properties of the firm automatically vest in the Company. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.
  • No Capital Gain Tax: No Capital Gains tax shall be charged on transfer of property from Proprietorship firm to Company.
  • Continuation of Brand Value: The goodwill of the Proprietorship firm and its brand value is kept intact and continues to enjoy the previous success story with a better legal recognition.
  • No Stamp Duty: All movable and immovable properties of the firm automatically vest in the Company. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.
  • No Capital Gain Tax: No Capital Gains tax shall be charged on transfer of property from Proprietorship firm to Company.
  • Continuation of Brand Value: The goodwill of the Proprietorship firm and its brand value is kept intact and continues to enjoy the previous success story with a better legal recognition.

LLP’s will be treated as Partnership Firms for the purpose of Income Tax w.e.f assessment year 2010-11

  • 30% flat tax rate + 3% education cess
  • No Minimum Alternate Tax & Dividend Distribution Tax
  • No surcharge is levied on income tax.
  • Profits of LLP is taxed in the hands of the respective LLP and not in the hands of the partners.
  • Minimum Alternate Tax and Dividend Distribution Tax is not applicable for LLP.
  • Remuneration to partners is taxable as “Income from Business & Profession”.
  • No capital gain tax on conversion of partnership firms into Limited Liability Partnership, subject to some capital.
  • Income Tax returns to be signed by the designated partner.
  • On conversion, the successor LLP can carry forward and set off the accumulated loss and unabsorbed depreciation of the converting firm.
  • Carry Forward and Set off Losses and Unabsorbed Depreciation: The accumulated loss and unabsorbed depreciation of Proprietorship firm is deemed to be loss/ depreciation of the successor company for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor company.