Friends, I think all of you have been following this series that we have been doing regarding the types of business entities.  Today, we will be discussing about LLP, that is limited liability partnership under the Ministry of Companies Act (MCA).  Simply put, an LLP means a business entity with two persons or more on board as partners.  The LLP has to register with the Registrar of Companies under MCA.  Name clearance has to be applied with a prescribed fee, which will be approved in two to three days on the basis of availability. Point to note is that similar/restricted names will not be allotted.  Registrar of Companies fee payable as prescribed on capital.

An LLP deed should contain the following details.

• Partnership deed has to be drafted with details of partners, names and address. 
• Nature of activity.
• Specify the bank operation by stating any one or all jointly or any two or any one particular person.
• The capital ratio.
• Profitability ratio.
• Condition of partners’ remuneration.
• LLP preconditions.
• Legal jurisdiction.

Process of registration of LLP

• Procuring DSCs for all partners.
• Apply for name clearance.
• Submit application for LLP registration with LLP deed along with application for DIN (director identification number).
• The registrar will approve the registration after satisfying all documents are in order and issue LLP registration certificate which will normally take 7 to 15 days from the date of application.
• Along with the LLP certificate PAN and TAN also will be issued. 

Documents required for registration:

• PAN card of all the partners.
• Rental agreement of the business place along with current electricity bill of the business place.
• Photograph of all partners.
• Aadhar card/passport/driving licence for address proof of all partners.

Points to be borne in mind:

• LLP is a limited liability concept.  That means in the eventuality of business losses, the partners’ personal assets are not liable for the company’s liability.  However, if the personal guarantee of the partner is extended to the loans, those specific loans will be covered as unlimited liability.
• There is no turnover restriction for partnership.
• They are entitled to do all legally permitted business in India and overseas.
• The income tax for the LLP shall be as prescribed under the Income Tax Act.

Conclusion: In our opinion, an LLP is good form of business, especially technology oriented and look for B2B as their clients and for a business or service, which is not family owned.

Friends, now it must be clear as to how and the what of an LLP.  Stay tuned for our next blog, which will be on a OPC (One Person Company).

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