ABSTRACT
As an entrepreneur, we’re sure you’ve done the right amount of research on the best business structure for your business. If you have chosen a Limited Liability Partnership (LLP), this is where we will not only help you make the final decision but also help you understand the application process with ease. LLP structure has the advantages of two forms of business structure – Partnership and Limited Liability Company. This means a good balance of advantages of both structures. Limited Liability Partnership (LLP) has come to be a desired shape of organization amongst entrepreneurs because it includes the advantages of each partnership firm and agency right into a single form of organization. The idea of the Limited Liability Partnership (LLP) was added in India in 2008. In straightforward words, the accomplices have restricted obligations such that their resources cannot be utilized to pay off the obligations of the company. In addition, one accomplice isn’t held dependable for the unfortunate behaviour of wrongdoing or carelessness of another accomplice. Limited liability partnerships (LLP) have presently ended up being the best frame of organization among business people. It joins the benefits of both ‘partnership firm’ and ‘company’ into a single frame of organization. A least two accomplices are required to join an LLP. In any case, there’s no upper restraint to it. At the slightest one accomplice of the LLP must be an inhabitant of India.
KEYWORDS
LIMITED LIABILITY PARTNERSHIP, PARTNERSHIP ACT, COMPANY, LAWS, BENEFITS, REGISTRATION PROCEDURE
INTRODUCTION
An LLP has the traits of each partnership corporation and agency. The Limited Liability Partnership Act, 2008 regulates the LLP in India. A minimum of two partners are required to comprise an LLP. However, there may be no higher restriction on the wide variety of partners of an LLP. LLP stands for Limited Liability Partnership. It is an incorporated business that allows its members to enjoy the benefits of a corporation as well as a partnership. It offers the advantage of limited liability like a corporation and the freedom to decide the internal management matters of the company based on a mutual agreement like a general partnership. This allows company members to spread risk and leverage individual expertise skills and division of labor.
LAWS
Sec. 25 of the Partnership Act states that each accomplice is mutually and severely at risk for acts performed by the other accomplices as an accomplice. Sec. 9 of the British Partnership Act 1890 gives that each accomplice is mutually obligated for the business’s contract and independently obligated for the wrongdoings of the commerce. In this way, we discover that the position of organization obligation in India is very diverse from that of the counterparty risk within the UK. Businesses that include boundless risk and individual obligation are often considered risky, and so they have to give an elective to constrained risk. A constrained risk association may be a shape of business organization in which accomplices can structure their commerce like a conventional organization and at the same time take advantage of restricted risk. An LLP could be a combination of a common and corporate association.
BENEFITS
The main advantages of applying for an LLP are listed below:
Legal Status: LLPs have independent legal status, just like corporations. LLP holds a different status from its counterparts. These entities have the right to sue a third party when there is a dispute and vice versa. Contracts are signed in the name of the LLP, which gives a sense of trust to various stakeholders and end users.
Limited liability of partners: The accomplices of an LLP have constrained risk. This implies that each partner’s risk is restricted to the agreed-upon commitment to the association. This appears that they are as it were dependable for paying the sum of commitments they have made and are not actually at risk for any misfortune in trade. In case an LLP gets to be bankrupt upon liquidation, as it were the resources of the LLP are at risk to pay its obligations. The accomplices have no individual risk and can subsequently act as trusted business visionaries.
Flexibility: The activities of an LLP are determined by the LLP agreement, based on a joint decision of the members of the company. This makes the operation of the business quite flexible compared to other forms of business.
Capital: LLPs can be incorporated in the absence of a minimum capital. In addition, it is not necessary to obtain an amount of capital provided by the relevant partners.
REGISTRATION PROCEDURE
Obtain a digital signature certificate (DSC)-
The LLP application process in India is done online and hence the purchase of DSC for all designated partners is required. All documents will be digitally signed by DSC before submission to the MCA. Each designated partner must provide a PAN card, proof of identity, proof of address, and a passport-size photo to apply for DSC.
Get a Director Identification Number (DIN)-
DIN is another mandatory document for all LLP Designated Partners. Form DIR-3 is submitted for this process. DIN is assigned by the state ROC (Registrar of Companies) to the respective partners. Aadhaar and PAN cards with certified copies, as well as DSCs of designated partners and experts, are required.
Approved name LLP-
At this point, you need to be very careful when choosing name options for your business. For LLP, the form RUN-LLP (Reserved Unique Name – Limited Liability Partnership) is submitted on the MCA portal. Before submitting, our team checks a name’s availability to make sure it’s unique and less likely to be rejected for one reason or another. One can submit 2 name options for approval with the form. In case the names are rejected, you will have one more chance to submit 2 new name options.
Merge LLP-
FiLLiP (Limited Liability Company Formation) is the next form to be filed to register an LLP company in India. If the designated partners do not have a DIN, this is when they can request it through this form. Once the FiLLiP is accepted, the certificate will be issued as legal evidence to conduct business activities in India. In addition, LLPIN (Limited Liability Partnership Identification Number), is a 7-digit number assigned to all registered LLP companies in India.
PAN and TAN required-
PAN (Fixed Account Number) and TAN (Tax Account Number) are crucial for conducting business transactions legally and in compliance with Government of India regulations. The practitioner files a separate request with Forms 49A and 49B to obtain the PAN and TAN for the LLP.
LLP Agreement-
The LLP Agreement is a very important document containing the rules and responsibilities of the named partners in the business. For this, Form 3 is filed on the MCA portal. It is mandatory to submit it within 30 days of applying for the LLP, otherwise, there will be additional fees for the delay. Once you’ve reached an agreement, it should be printed on stamped paper. Stamp tax is different in each state and is calculated based on authorized capital. You can check the state registration tax rates in the LLP Agreement here. And that’s the whole LLP registration process in India. With the help of the skilled professionals at LegalWiz., this process can be completed quickly and flawlessly. Ready to start your business? Drop your details in the inquiry form and let our experts take care of it.
CONCLUSION
The pertinence of the LLP Act isn’t restricted to professional firms and thus the Act can be considered an inclination for Irani Commission recommendations over the Naresh Chandra Commission. The 2021 alteration brings the law in line with modern financial conditions. The presentation of concepts such as start-up LLP and little LLP is in line with the government’s financial approach to advance and empower little businesses and new businesses. The foundation of extraordinary courts will offer assistance to resolve cases rapidly and improve the ease of doing trade in India. There’s a critical requirement for the Incomparable Court to clarify its legal position on whether an LLP can enter into an organization.
REFERENCES
- CA Joel Lester Dsouza, CFA, Limited Liability Partnership (LLP) Registration in India, Tax Guru, available at: https://taxguru.in/corporate-law/limited-liability-partnership-llp-registration-india.html (last visited 16 August 2023).
- An Overview of Limited Liability Partnership Registration, Corpbiz, available at: https://corpbiz.io/llp-registration (last visited 16 August 2023).
- Ruchika Agarwal, LLP Registration Process in India, LEGAL WIZ, available at: https://www.legalwiz.in/blog/llp-registration-new-process-in-india (last visited 16 August 2023).
Name – Vaishnavi Krushna Parate
College – Shri. Nathmal Goenka Law College, Akola Maharashtra
