- What is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership is a hybrid of Company and Partnership form of business. It combines the advantages of both the Company and Partnership into a single form of organization. It enjoys the benefits of having a separate legal entity, perpetual succession and a limited liability.
- What are the salient features of a Limited Liability Partnership (LLP)?
- It is a separate legal entity with perpetual succession.
- Every limited liability partnership shall have either the words “limited liability partnership” or “LLP” as the last words of its name.
- A minimum of two Designated Partners will be required and there will not be any limit to the maximum number of partners.
- Every Designated Partner would be required to obtain a “Director’s Identification Number” (DIN).
- What are the advantages of forming an LLP?
- Low cost of Formation of LLP.
- It is easy to register an LLP due to lesser technical formalities and legal complexities.
- No requirement of audit of the LLP upto a certain limit, hence it is easier to maintain LLP.
- There is no minimum authorized capital requirement for an LLP.
- There is no restriction on the maximum number of partners.
- Individual Partners are not liable for the acts of other partners, unlike a partnership.
- The partners have limited liability and their personal assets are not exposed except in cases of fraud.
- Lesser formalities to maintain statutory records.
- What is the difference between LLP and a Partnership Firm?
- An LLP is governed by the provisions of the LLP Act, 2008 whereas a Partnership is governed by the Partnership Act, 1932.
- Registration of an LLP is compulsory but the registration of a partnership firm is optional.
- A partnership firm does not have a perpetual succession.
- An LLP can purchase immovable property in its own name, unlike a partnership firm, which cannot purchase property in its own name
- What are the steps to incorporate LLP?
Name reservation: The first step to incorporate Limited liability partnership (LLP) is reservation of name of LLP. Applicant has to file e-Form 1, for ascertaining availability and reservation of the name of a LLP business.
Incorporate LLP: After reserving a name, user has to file e-Form 2 for incorporating a new Limited Liability Partnership (LLP).
- Can an existing partnership firm/ private company/ unlisted company be converted to LLP?
Yes, an existing partnership firm/ private company/ unlisted company can be converted into LLP.
- Who can be a “Designated Partner” and what are its requirements?
Appointment of at least two “Designated Partners” is mandatory for all LLPs. And both shall be individuals and at least one of the Designated Partners shall be a resident of India.
In case of a LLP in which either one or all the partners are bodies corporate, then at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.
- What is the manner in which a partner of an LLP can bring his contribution?
Partner’s contribution may consist of both tangible and/or intangible property and any other benefit to the LLP.
- When does audit becomes mandatory in case of LLP?
‘LLP’ is required to get their books of accounts audited when the total revenue is more than INR Rs. 40 lacs or total capital of partners exceeds INR Rs. 25 lacs.
- Whether LLPs would be required to maintain books of accounts?
An LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A “Statement of Accounts and Solvency” in prescribed form shall be filed by every LLP with the Registrar every year.
- Whether annual return would be required to be filed?
Every LLP would be required to file with ROC an Annual Return every year.
- Whether e – filling of documents with ROC would be allowed?
Yes, the filling and inspection of documents can be done online through the website mca.gov.in.
- Can I start an LLP in my home address or do I need to rent a commercial space?
There is no need to rent a commercial space just for forming an LLP. You can start it right from your home address.
- In that case, what documents should be furnished?
A latest utility bill, namely electricity or a land-line telephone bill (not older than 2 months) and a tax receipt would be required to be furnished.
- But my residential house is registered in my mother’s name. Can I still use it for registering my LLP?
Yes, you can. It is not necessary that the property has to be registered in the partner’s name.
- Does an LLP also have to maintain the record of meetings?
Yes, proper Minutes Book should be maintained by the LLP to record Minutes of the Meetings of the partners.
- Is there any provision related to meetings of the partners, like that of a private limited company?
No, there is no such provision. The LLP Act assigns the liberty to the partners for deciding the frequency of the meetings.
- Can an LLP be converted into a private limited company in future?
No. Although there is an enabling provision in the Companies Act, 2013 for this, yet there are no such said rules and mechanism in place for conversion of an LLP into a private limited company.
- I am based in Tamil Nadu and Taxmantra is based in Kolkata and Bangalore. Can Taxmantra help me in registering my LLP?
Definitely we can.
The entire process of registration is online. Hence, the location difference is out of question.
Taxmantra has network firms and qualified professionals as associates in all the major cities of India. Even though our Global Delivery Centre is in Bangalore and Kolkata, we have local presence in over 100 cities in India and abroad.
- Do I need to courier all the copies of the documents every time you require them?
Not at all. You only need to send us the scanned soft copies through email. All documents are filed electronically with the department. Hence, there is no requirement of couriered hard copies.
Incorporate your LLP with taxmantra.