Limited Liability Partnership is an organization structure, providing features and benefits of a corporate entity and a flexible structure. The partners are required to associate closely with its operations. Therefore, such business structure is preferred by professionals, small and medium scale businesses that require the partners to operate closely with their individual efforts. Also in LLP no partner is responsible for the negligence of the other partner. A LLP also provides limited liability protection for the owners from the debts of the LLP.
LLP is an easiest form of business to incorporate and manage in India. This structure of LLP is introduced by Limited Liability Partnership Act, 2008 which governs the LLP registration process as well the compliance matters.Further, it is regulated through LLP Agreement executed by the partners, providing flexibility to operate internally. Compared to a company, the compliance requirements are lower in case of LLP.
The LLP registration was not possible for the partners not having DIN because of the deferment of DIN application by them. However, the Ministry of Corporate Affairs has recently announced the redesigned process of registration, which is now in effect from 2nd October, 2018 reopening the gates for all to register an LLP.
Benefits
Distinct Establishment
Registeration of an LLP in India creates a separate entity through legal process. Thus, its existence and its identity is different from its partners which gives an LLP a wide legal capacity and can own business and can also incur debts. However, the Partners of a LLP have no liability to the creditors of a LLP for the debts of the LLP.
Flexibility to operate
Just like a partnership firm, the LLP operates is a manner that has been agreed by partners in the LLP agreement once its registeration is complete. he partners may decide the duties and responsibilities of each partner or how a particular operation can be carried on with mutual consent within the LLP agreement itself to confer flexibility in operations.
Uninterrupted Existence & Easy Transferarbility
An LLP is everlasting firm till it is legally dissolved. It is not affected by the death or departure of any of the partners. Change of ownership does not affect the working of LLP. The ownership of LLP is easily transferrable to another person inducting them as a partner.
Limited Liability of Owners
The Partner’s liability is limited to the extent of capital contribution as agreed by partners in the LLP agreement undertaken. It also assures that the loss or debt of LLP is not assigned to partners even while liquidation.
Lower Compliance Requirement
In case of LLP agreement there is a lower compliance requirement compared to a private company, including the audit requirement. On attaining turnover of more than Rs. 40 lacs or capital contribution of less than Rs. 25 lacs, the requirement of statutory audit arises. Further, provisions such as Meeting of partners, operation through resolutions are relaxed under LLP formation and not mandatory in every case.
Ownership of Property
A LLP being an artificial judicial person, can acquire, own, enjoy and sell, property in its name. No Partner can make any claim upon the property of the LLP – so long as the LLP is a going concern.
Documents Required
PAN Card
PAN Card of all Partners. Foreign nationals may provide passport
Partners’ Address Proof
Aadhar card and Voter ID/ Passport/ Driving License of Shareholder, Nominee, and Directors.
Photograph
Latest Passport size photograph of all Partners.
Business Address Proof
Latest Electricity Bill/ Telephone Bill of the registered office address.
NOC from owner
No Objection Certificate to be obtained from the owner(s) of registered office
Rent Agreement
Rent Agreement of the registered office should be provided, if any.
Note
In case of NRI or Foreign National, documents of the partner must be notarized or apostilled.