Overview
Benefits of limited liability partnership
Limited Liability Protection
- Limited liability is the main benefit. In contrast to conventional partnerships, which subject participants to personal liability for corporate obligations, an LLC protects your assets. The LLP's agreed-upon contribution limits partners' liability, shielding them from the financial risks associated with running a corporation.
Flexibility and Management
- LLPs offer flexibility in internal management. Partners have the freedom to structure their agreement as per their needs, defining profit-sharing, decision-making, and governance processes. This allows for a more customized approach to managing the business.
- No minimum capital requirement: Unlike companies, LLPs don't have a mandatory minimum capital contribution, making them accessible to businesses starting with limited resources.
Taxation Benefits
- LLPs are taxed as pass-through entities, meaning the business profits or losses pass directly through to the partners' tax returns. This avoids double taxation, which occurs when companies pay corporate tax and then shareholders pay dividend tax on distributed profits.
- Dividend Distribution Tax (DDT) does not apply to LLPs, offering an additional tax advantage compared to private limited companies.
Simple Registration process
- In general, incorporating a limited liability partnership is quicker and less complicated than founding a corporation. Optional online registration speeds up the procedure even further.
Process of limited liability partnership Registration
Registering a Limited Liability Partnership is simple when you have the right help. Here’s a step-by-step guide to the Limited Liability Partnership registration process:
Step 1: Obtain Digital Signature Certificates (DSC)
Since Limited Liability Partnership registration is done online, you need Digital Signature Certificates (DSC) for all designated partners. DSCs ensure that the documents you submit online are secure and authentic.
Step 2: Get Your Director Identification Number (DIN)
Each designated partner is required to have a Director Identification Number (DIN). You can apply for DIN by submitting the required documents and information through the online portal.
Step 3: Name Reservation
Pick a unique name for your LLP and send it for approval. Ensure the name follows the naming rules set by the Ministry of Corporate Affairs (MCA).
Step 4: Drafting of LLP Agreement
Create the LLP agreement that outlines the rights, duties, and responsibilities of the partners. This agreement must be filed with the Registrar within 30 days of your LLP's incorporation.
Step 5: Filing Incorporation Forms
Submit the incorporation forms and the necessary documents to the Registrar of Companies (ROC). Once the ROC approves your application, they will issue a Certificate of Incorporation, officially registering your LLP.
Step 6: PAN and TAN Application
Request a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) for your LLP. These are needed for tax purposes and other financial activities.
Step 7: Open a Bank Account
With the Certificate of Incorporation, PAN, and TAN, you can open a bank account in your LLP’s name, making it easier to handle financial transactions.
Documents Required for Limited Liability Partnership Registration
Having all the necessary documents ready can speed up the Limited Liability Partnership registration process. Here’s a list of the required documents:
1. Address Proof of the Registered Office
- Provide a valid proof of your LLP’s registered office, such as a utility bill, rental agreement, or property ownership documents.
2. Identity and Address Proof of All Partners
- Submit copies of PAN cards, Aadhaar cards, or passports of all partners to verify their identity and address.
3. Digital Signature Certificates (DSC)
- Obtain DSCs for all designated partners to help with the online registration process.
4. Director Identification Number (DIN)
- Ensure each designated partner has a valid DIN obtained through the online application.
5. LLP Agreement
- Draft and file the LLP agreement detailing the understanding and operating procedures between the partners.
6. Name Approval Letter
- Once the Registrar approves the name, include the name approval letter in your documents.
7. Declaration of Compliance
- Submit a declaration signed by an advocate, notary, or company secretary.
8. No Objection Certificate (NOC)
- If the registered office is in a rented property, provide a No Objection Certificate from the property owner.
9. Partner Consent Forms
- All partners must sign consent forms agreeing to act as designated partners in the LLP.
LLP Registration Fees
Understanding the fee structure for Limited Liability Partnership registration is important for planning your budget. Here’s a breakdown of the typical fees:
Note: Fees may vary based on the number of partners and specific requirements.
Limited Liability Partnership registration in India involves specific services and associated fees. Here’s a detailed breakdown to help you understand the costs involved:
1. Name Reservation
- Government Fees: ₹200
- Professional Fees: As per industry standards
- Reserving a unique name for your LLP is the first step in the registration process. The government charges a nominal fee of ₹200 for this service. Professional fees can vary based on the consultant or service provider you choose.
2. Incorporation
- Government Fees: ₹500-₹2000
- Professional Fees: As per industry standards
- The incorporation of an LLP involves filing various documents and obtaining approvals. Government fees range from ₹500 to ₹2000, depending on specific requirements and the number of partners. Professional fees are additional and depend on the complexity of the incorporation process.
3. LLP Agreement
- Government Fees: ₹1000 and above
- Professional Fees: As per industry standards
- The LLP agreement outlines the rights and duties of partners and is a mandatory document. The government charges a fee starting from ₹1000 for this agreement. Professional fees vary based on the legal services you engage
4. Professional Fees
- Government Fees: N/A
- Professional Fees: As per industry standards fees are additional costs incurred for availing services from consultants, legal advisors, or registration service providers. These fees are essential for ensuring a smooth registration process and compliance with legal requirements.
Post-Compliance for Limited Liability Partnership
Post-compliance services for a Limited Liability Partnership (LLP) are crucial to ensure that the LLP remains compliant with all regulatory requirements after its formation. Here are the key post-compliance services for an LLP:
1. Annual Filing Requirements
Annual Return Filing (Form 11): Every LLP is required to file an annual return in Form 11 with the Registrar of Companies (RoC) within 60 days from the end of the financial year. This form includes details of the partners and any changes in the LLP during the year.
Statement of Account and Solvency (Form 8):
LLPs must file Form 8, which includes the statement of account and solvency, within 30 days from the end of six months of the financial year.
This form must be signed by designated partners and certified by a Chartered Accountant.
2. Income Tax Compliance
Filing of Income Tax Returns: LLPs are required to file their income tax returns annually.
The due date is generally July 31st, but it may be extended if the LLP is subject to audit under the Income Tax Act.
Tax Audits
If the turnover exceeds the specified limit, the LLP is required to undergo a tax audit and file the tax audit report.
3. GST Compliance
GST Registration: Ensure that the LLP is registered under GST if it meets the threshold limits for registration.
Monthly/Quarterly GST Returns: File monthly or quarterly GST returns (GSTR-1, GSTR-3B) as applicable.
Ensure proper reconciliation of input tax credit (ITC) with GSTR-2A/2B.
Annual GST Return: File the annual GST return (GSTR-9) and the audit report (GSTR-9C, if applicable).
4. Secretarial Compliance
Maintenance of Statutory Registers: Maintain various statutory registers such as the Register of Partners, Register of Contributions, etc.
Minutes of Meetings: Proper documentation and maintenance of minutes of meetings of partners and designated partners.
5. Event-Based Compliance
Changes in LLP Agreement: File Form 3 for any amendments or changes to the LLP Agreement.
Change in Partners/Designated Partners: File Form 4 for changes in partners or designated partners, including their appointment, cessation, or change in particulars.
Change in Registered Office: File Form 15 for any changes in the registered office of the LLP.
Filing of Charges: File Form 8 for the creation or modification of charges on the assets of the LLP.
6. Other Compliances
DIN KYC: Ensure that all designated partners complete their annual DIN KYC compliance.
Professional Tax: Compliance with professional tax regulations, if applicable in the respective state.
ESI/PF Compliance: Compliance with Employee State Insurance (ESI) and Provident Fund (PF) regulations if the LLP has employees.
7. Compliance Monitoring and Advisory
Regular Compliance Monitoring: Ongoing monitoring of compliance requirements and due dates to avoid penalties.
Advisory Services: Providing advisory services on various compliance matters, legal updates, and changes in regulations.
How Taxlegit help in LLP registration
Expertise and Experience
- Knowledgeable Professionals: Taxlegit likely has a team of experts specializing in LLP registration, ensuring that all legal and procedural aspects are correctly handled.
- Experience in the Field: Having completed numerous registrations, they can navigate complexities and avoid common pitfalls.
Comprehensive Services
- End-to-End Support: They might offer comprehensive services, including name reservation, document drafting, filing with the Ministry of Corporate Affairs, and obtaining the LLP agreement.
- Post-Registration Services: Taxlegit may provide ongoing compliance services, ensuring the LLP adheres to annual filings and other legal requirements.
Efficiency and Speed
- Streamlined Processes: With established procedures and automation, they can expedite the registration process.
- Minimized Errors: Expert handling reduces the likelihood of errors that can delay registration.
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