What is an LLP?
A limited liability partnership (LLP) is a partnership in which some or all partners
(depending on the jurisdiction) have limited liabilities. It therefore exhibits
elements of partnerships and corporations. In an LLP, one partner is not responsible
or liable for another partner's misconduct or negligence.
Concept of "Limited Liability Partnership"
- LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
- The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
- Further, no partner is liable on account of the independent or unauthorized actions of other partners, thus individual partners are shielded from joint liability created by another partner's wrongful business decisions or misconduct.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
- Since LLP contains elements of both 'a corporate structure' as well as 'a partnership firm structure', LLP is called a hybrid between a company and a partnership.
Importance Of Registration
LLP has now come up as one of the most preferred legal entities for Professionals as well as service organizations owing to the flexibility attached under the Limited Liability Partnership Act. There is flexibility with respect to the structuring of management and ownership as well as lesser number of compliances as compared to a private limited company.
Benefits of registration as an LLP
- Personal liability of an individual partner arising from any omissions, errors, negligence or incompetence is limited to cash/kind contributions made by that partner.
- Reasonable Formation CostsThe cost of LLP registration is lesser compared to a private or public company.
- Relaxed statutory compliances Entrepreneurs who form LLP's often make use of relaxed statutory compliances.
- Relaxed auditing norms Limited Liability Partnerships (LLP'S) are not required to audit their books of account where their annual turnover is less than INR 40 lakhs or if the contribution is less than INR 25 lakh.
- No Minimum Capital Contribution Norms There are no specific requirements on the minimum capital contribution by partners in an LLP. Also there are no restrictions on the number of partners forming the LLP and no limit on the maximum number of partners in an LLP.
- Relaxed Government Regulations LLP has minimum compliances and government interventions. This makes it a viable option for first-time entrepreneurs looking for a good business form.
Documents Required
Documents Required For LLP Registration
You need to have the following set of documents before proceeding for registration:
- Self-attested PAN card copy of proposed Designated Partners
- Self-attested Address Proof of Proposed Designated Partners (Passport or Driving Licence or Voters ID or Aadhar Card)
- Self-attested Latest Bank Statement or Mobile Bill or Gas (Not older than 2 months)
- Address proof of the proposed Registered Office (electricity bill or Landline or Gas Bill and It can be a residential property) and rental agreement
- No Objection (NOC) from the person who owns the property mentioned above (we will prepare)
- 2 passport size photos of proposed Designated Partners LLP Incorporation Process
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