LIMITED LIABILITY PARTNERSHIP
LIMITED LIABILITY PARTNERSHIP
A limited Liability partnership is a partnership where the partners have limited liabilities. Their extent of liability is only limited to the capital they bring in and they are not held accountable for other fellow partners’ misconduct. Limited liability basically means that the personal property and assets of the Partners can not be used for paying the debts of the business in case of bankruptcy. LLP(Limited Liability Partnership) is governed by the limited liability partnership act 2008 in India. But is it very popular and well in use in other countries too?
Features of Limited Liability Partnership
- A limited liability partnership is a separate legal entity from its partners.
- At least one of the partners should be an Indian national in LLP
- Limited Liability partnership will have perpetual succession.
- An LLP is registered and controlled by the Registrar of Companies (ROC)
- No minimum capital is required to start a limited liability partnership.
- No minimum or maximum limitations for the number of members are required in a limited liability partnership.
Advantages Of Limited Liability Partnership
- Easy formation – It is very easy to form an LLP, no big formalities are required.
- Liability- The Partners of an LLP exercise the right to limited liability.
- Perpetual succession- An LLP does not stop existing unless winded up. It continues to exist irrespective of any partner’s death, insolvency, unsound mind, etc
- Management: The directors of the company exercise the major decision-making power over shareholders.
- Transferability of ownership- Any partner in the firm can join, leave and transfer the ownership rights to other partners easily.
- Taxation- LLPs can have a huge benefit in taxation, as they can avail many exemptions from tax and it faces fewer taxes than compared to other companies.
- Audit- The requirement of a statutory audit is not a constraint here. LLPs need not have a compulsory audit done.
Disadvantages of Limited Liability Partnership
- Permission - Some of the states in India, do not give permission for LLP
- Credibility - Most of the Public does not consider LLP very credible and thus refuses to invest in it.
- Non-Coordination - The partners in an LLP, do not consult each other to make decisions or coordinate with each other.
- Transfer Procedure - The transfer of ownership usually is a long hectic process and is time-consuming.
- Lack of Recognition - LLPs are very less popular and get very little recognition which makes it a big disadvantage to them.
Documents Required for Registration of a Limited Liability Partnership
- ID Proof of Partners
- Address Proof of Partners
- Residence Proof of Partners
- Photographs of partners
- Passport( Only applicable for NRIs and Foreign Nationals)
- Address Proof for Registered Office
- Digital Signature Certificates of Partners
The procedure of a Limited Liability Partnership
- Obtain Dsc
- Din Application
- Name Approval
OBTAIN DSC( DIGITAL SIGNATURE CERTIFICATE)
All the partners of the partnership to be commenced should get their digital signature certificates in order to sign the documents online. We can get our DSCs from certified agencies and the cost of it varies from one agency to another.
APPLY FOR DIN( DIRECTOR IDENTIFICATION NUMBER)
All the partners should apply for Director Identification Number using Form DIR-3
A document called LLP-RUN ( Limited Liability Partnership Reserve Unique Name) should be filed under Central Registration Center. 2 names can be provided and the registrar shall approve the name that does not resemble any existing company or partnership.
FiLLip( Form for Incorporation of Limited Liability Partnership) shall be filed with the state registrar.
Within 30 days of Incorporation, LLP Agreement has to be filed on stamp paper in form 3 in the online MCA portal. Incorporation and registration of a Limited Liability Partnership are as easy and advantageous as mentioned above. It nearly takes up to 10 business days for the whole process and the cost depends on the number of partners, capital contribution, and the certified agency you are applying through.