How to Setup an LLP in India: A Comprehensive Guide

Introduction

Limited Liability Partnership (LLP) is becoming common choice for businesses and startups for formation of company in India. LLP is the perfect form for a variety of ventures since it combines the advantages of a partnership with the limited liability of a company. In this blog you will be guided through the step-by-step process of incorporating an LLP in India.

A Limited Liability Partnership (LLP) is a type of hybrid structure for businesses that gives its partners the flexibility to run the business while yet providing them with the advantages of limited liability. A Limited Liability Partnership is governed by The LLP Act, 2008

Various Benefits of Setting Up an LLP in India

- Limited Liability: The amount of liability for partners is capped at their capital contribution in the partnership.
- Flexibility: LLPs provide operational freedom without the hassle of complicated regulatory requirements as required in the Companies in India.
- Tax Advantages: When compared to other business arrangements, LLPs have reduced tax rates and tax advantages.
- Different Legal Entity: An LLP act as a unique legal entity which is independently of its partners.

Step-by-Step Guide to Setting Up an LLP in India

1. Choosing Partners and Designated Partners:

To start an LLP, you need at least 2 people as partners and one of these partners must be an Indian resident, however there's no maximum limit in terms of nos of partners. These partners are responsible for making sure the LLP follows all the necessary laws and rules. While forming an LLPs is that there’s no minimum amount of money a designated partner needs to contribute.

2. Select a Unique Name for LLP

The first step of formation of LLP is choosing a name of the company that complies with the rules set forth by the Ministry of Corporate Affairs (MCA). Before you can officially register your LLP, you need to make sure the name you want to use is available. You can do this by checking with the Ministry of Corporate Affairs (MCA). They have a service called RUN-LLP that lets you reserve a name you like. Partner should ensure that the name of the LLP is original and doesn't violate any trademarks.

3. Obtain Digital Signature Certificate (DSC)  

Digital Signature is mandatory to digitally signed the documents. To electronically file documents with the Registrar of Companies, one should get a Digital Signature Certificate (RoC).

4. Apply for Director Identification Number (DIN)  

All the partner in the LLP should apply for Director Identification Number by filing Form DIR-3, which must be filed on the MCA site.

5. Register on MCA Portal

Post obtaining DIN and DSC LLP should fill out Form FiLLiP (Form for Incorporation of Limited Liability Partnership) to register your limited liability partnership on the MCA site. The form should include details of the intended business operations, the partners' information, and the LLP's details.

6. Draft the LLP Agreement

The LLP agreement should be drafted which will highlights the partners' responsibilities, rights, and duties. LLP Agreement should be submitted to the MCA within 30 days of incorporation.

7. Obtain PAN and TAN  

Post incorporation, LLP should apply for your Tax Deduction and Collection Account Number (TAN) and Permanent Account Number (PAN). Online Copy of PAN can be downloade from below link Department (using following link)

Documents Required for LLP Registration

Below are the list of documents required for LLP registration in India

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What are various LLP Forms

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Checklist for LLP Registration

• Minimum 2 partners and no limit on maximum partners.
• Mandatory to obtain DSC for all designated partners.
• Obtain DPIN for all designated partners.
• Unique Name of the LLP.
• Capital contribution by the Partners.
• LLP Agreement.
• Proof of registered office of the LLP.

Requirements for Compliance following LLP Formation

Following its establishment, your limited liability partnership (LLP) must comply with onoging regulatory obligations, such as filing annual financial statements and returns on an annual basis, registering for GST (if applicable), and keeping accurate bookkeeping records.

In India, forming an LLP is a simple procedure as long as you take the right approach. An LLP is a great option for entrepreneurs wishing to launch a firm with a partner because of its many advantages. To ensure a successful and seamless company journey, make sure all legal criteria are met.

Jordensky can help you with an end-to-end process from India Entry or Incorporation to all other registrations like FSSAI, IEC, Start-up India etc along with the Statutory Compliances and other legal requirements. For further information you can book a free consultation call on the website or write to us at info@jordensky.com