A limited Liability Partnership is a form of business entity that combines the benefits of a corporate and traditional business structure. So, it is often called a hybrid between a partnership and a company. It amalgamates the benefits of both limited liabilities of a company as well as that of a partnership. The LLP can continue to remain in existence even if the partners are changed. It can enter into contracts and can also hold property in its name. In this, the liability of the partners is limited to their pre-agreed contribution. It reduces the liabilities for the actions of other partners, so individual partners are protected from another partner’s misconduct or wrongful decision.
The concept of LLP is governed by the Limited Liability Partnership Act of 2008 and LLP Rules,2009.
Starting a business can be an overwhelming experience with many factors to consider. Deciding the right form of business entity is of utmost importance while starting up. Here, we will unveil why you should opt for a Limited Liability Partnership:
|Limited Liability Partnership||Requirements|
|Partners needed||Minimum 2 partners are required to register a LLP. However, there is no limit on the maximum number of partners.|
|Minimum capital||There is no requirement for minimum capital contribution.|
|Resident person||At least one designated partner of LLP should be an Indian resident|
|Name of LLP||The name of LLP should be unique and should end with LLP.|
|For Indian Nationals:||For Designated DirectorsFor Registered office premises:|
|For Foreign Nationals and NRI:||For Designated DirectorsFor Registered office premises:|
Online Limited Liability Partnership registration made easy by Intine. Registration of a company may look tedious to those entering afresh into the venture. Intine, a prominent player in this field is there to help you at every stage of LLP registration. The entire package of LLP registration can be availed at just Rs. 6,990. The package covers;
LLPs needs to file their return in Form ITR 5. This form can be filed online with the help of the DSC ( Digital Signature Certificate ) of the designated partners on the Income Tax website. The procedure to file Income Tax Return is completely Online. This involves the following stages:
It is mandatory to file form 8 in the case of LLP. Form 8 is a statement of Accounts and solvency. It shows the financial transaction undertaken during the financial year along with the financial position of the company. All LLPs are required to prepare and close their accounts by 31st March of every year. Form 8 needs to be filed by at least 2 designated partners with the ROC within 30 days of completion of 6 months of the financial year i.e., 30th October every year.
Form 11 is a statement of the Annual return of LLP. The return should be filed every year to maintain compliance with the Ministry Of Corporate Affairs. Filing of Form 11 is mandatory for all the LLPs.It contains details of the LLP. Even in case of no activity, this form needs to be filed. This is an e-form that is to be filed on MCA Portal. All the LLPs are required to fill this form within 60 days of closure of the financial year, failing which will lead to a penalty fee. Based on your capital a fee for this form will be decided.
Due to ease of maintenance and ease of registration, Partnerships governed under the Partnership Act, of 1932 were very popular. But with the introduction of the concept of Limited Liability Partnership under the Limited Liability Partnership Act, 2008 the eminence of partnership has been overtaken by LLP, which offers many tax benefits and has advantages of more credibility & lesser compliance. Here, we will list down the basic points of difference between LLP and Partnership firm.
|Basis of comparison||Limited Liability Partnership||Partnership|
|Entity type||LLP is a separate legal entity from its partners and it can hold property in its name & can also enter into contracts||Partnership form does not hold a separate legal status from its partners.|
|Governing Law||Limited Liability Act, 2008||Indian Partnerships Act, 1932|
|Registration||Registration of LLP under LLP Act is mandatory||Registration of the Partnership Firm under the Indian Partnership Act, 1932 is voluntary|
|Liability of the Partners||Liability of partners in LLP is limited to the share of their contribution. One partner is not liable for the actions of another partner.||The liability of the partner is not limited and the shareholders risk losing their personal assets. The action of one partner can hold another liable.|
|The number of partners||Minimum 2 designated partners are required to incorporate LLP. However, there is no limit on the maximum number of partners that a LLP can have.||The maximum no. of partners that a partnership firm can have is 50.|
|Registration||Registration of LLP is compulsory and it is registered with ROC on MCA’s portal.||Registration is not mandatory for partnership Firms. If registered, registration shall be done with the local Registrar of firms.|
|Compliance and Taxation||Tax on LLP profit is 30%+ educational cess. It is compulsory for LLP to file ITR with MCA.||Tax on Profit of a Partnership firm is 30% + educational cess. There is no annual return filing requirement for a partnership firm.|
|Credibility||MCA allows the availability of documents for the general public except for agreements between partners. This transparency creates higher credibility and fundraising becomes easy for LLPs.||Any data or information of the Partnership firm is not disclosed on the public platform.|
|Naming aspect||Name of a Limited Liability Partnership must end with ‘LLP’.||A partnership firm can be started with any name of choice.|
|Creation||LLP is created by law||A Partnership is created by contract|
There are various types of GST registration such as
For registration of a partnership firm, a DSC is not required so the partners do not have one. But, for conversion of a partnership firm to LLP as a necessary step, it is mandatory for all the partners to obtain a Digital Signature certificate.
For conversion of partnership firm to LLP, all the directors are required to obtain a DPIN/ DIN(Director Identification Number) which is a unique number and will be valid for life.
This form shall be filed with details like
This form for conversion shall be filed by all the partners of the firm with information like
Within 30 days of incorporation of LLP, details of LLP Agreement must be filed in Form 3 which includes the following information:
On approval of the conversion application, a certificate of Incorporation will be issued by the Registrar. This would result in the transfer of all the assets, liabilities, and interests of the partnership firm to LLP. If the application for conversion gets rejected by the Registrar then the firm can file an appeal before the Tribunal.
The LLP shall intimidate the within 15 days about the conversion status to the Registrar of Firms in Form 14 along with;With the compliance of all the above-mentioned procedures, it can be termed that the process of conversion of Partnership firm to LLP is complete.
|Type of Entity||Documents Required|
|Partnership and LLP|
|Private Limited Company and Public Limited Company|
You have to provide all the information required for filing the GST application and need to upload all the document in the Intine Console or Share with Intine Expert
Once all the required documents are submitted, Intine expert will file the form, Customer needs to provide OTP for verification. Once the application is submitted successfully, you will receive an ARN number (application number).
Once the application is Submitted, GST department will examin the application and may approve the application or ask for clarification . If there is clarification from the GST department, Intine Experts will file it on priority basis. You will be updated on the status.
Yes, an existing firm can be converted to LLP by complying with the provisions mentioned in clause 58 and Schedule 3 and 4 of the Limited Liability Partnership Act, 2008. Form 17 along with Form 2 needs to be filed and submitted for such conversion and incorporation.
A Limited Liability Partnership is governed by Limited Liability Partnership Act, 2008, and the rules made thereunder i.e., Limited Liability Rules, 2009.
A Limited Liability Partnership offers the following advantages;So, forming an LLP is advantageous because of the benefits it offers.
An LLP is required to file a statement of accounts and solvency in Form 8 and an annual return of LLP in Form 11. The annual return shall be filed within 60 days of closure of the financial year and the statement of accounts and solvency should be filed within 30 days from the end of 60 days of the financial year.
All the LLPs are compulsorily required to file statements of accounts and solvency in Form 8 which includes a declaration of the state of solvency by the designated partners along with the statement of assets and liabilities, and statement of income and expenditure of LLP. This form needs to be filed out annually by the LLP.
The Limited Liability Partnership Act,2008 does not provide for the conversion of two or more firms into a single LLP. Thus multiple partnership firms cannot be converted into a single LLP. .
According to sub-section (3) of section 3 of the LLP Act, any change in the partners of Limited Liability Partnership shall not affect the existence, liabilities, or rights of the LLP.
According to Section 32 of the LLP Act, a partner may bring its contribution in the form of tangible, movable or immovable, or intangible property or other benefits to the Limited Liability Partnership, including promissory notes, money, other agreements to contribute property or cash, and contracts for services to be performed. So, it is not necessary for the partner of LLP to bring contribution in cash only, it can be in any form as mentioned in Section 32 of the LLP Act.
According to Section 32 of the LLP Act, 2008 read with sub-rule(1) of Rule 23 of the LLP Rules, 2009, the contribution given by each partner shall be disclosed and accounted for in the accounts of LLP along with the nature and amount of contribution.
The ‘statement of accounts and solvency’ of LLP shall be duly signed by its designated partners on behalf of the Limited Liability Partnership.