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Understanding LLP Registration as a Business Structure
Limited Liability Partnership (LLP) is a balanced structure, carrying the benefits of conventional partnership and still limiting the personal liabilities of the partners. It is regulated as a contractual agreement between the partners under the Limited Liability Partnership Act, 2008. It has quickly become a popular choice for services and professional firms like Chartered Accountants, recruiting firms, consulting businesses, etc.
LLP as Compared to Private Limited
LLPs are similar to Private Limited Companies with respect to compliance and operational requirements. Recognized as a separate legal entity than the partners, it can contract or involved in any legal proceedings in its own name. That enables the partners of an LLP to separate business liabilities or debts being recovered from their personal assets. Compliance requirement here is greater than regular partnership firms. However, Compared to a private limited company structure, it is easier to incorporate and maintain.
As a drawback, an ownership transfer of a Limited Liability Partnership is not as easy as of a company. Neither an LLP can issue ESOP. For this reason, LLP is not the most ideal choice for startups who want to hyper-grow, seek seed investor or venture capital funding, or issue share capital to its employees.
Registration of LLP is Simple with P. Sagar solicitors
The process of LLP Registration in India is revamped by the Ministry of Corporate Affairs. A quicker process of LLP incorporation is made available on 2nd October 2018 as part of the ease of doing business initiative by the government. Experts at P.Sagar Solicitors have helped hundreds of entrepreneurs with the LLP registration process, in all major cities of India including Mumbai, Delhi, Bangalore, Pune, Ahmedabad, Hyderabad, and more. Our services have equally relevant reach within smaller cities and towns in the country.
What are the advantages of registering a business as an LLP?
Limited Liability of Partners
Because an LLP can enter into a contractual relationship in its own capacity, it offers a great advantage to the partners for limiting their personal risk. Liability of financial contribution of any partner is restricted to the capital contribution as per the LLP agreement. Many new age businesses prefer LLP registration over partnership so that their personal assets remain safe in case of loss, or even insolvency. Further, one partner is not held responsible for the actions of negligence or misconduct of any other partner.
Separate Legal Existence
Registration of LLP creates a separate legal identity than its partners. Governed by the LLP Act of 2008, it allows the business to contract with other entities, take legal action, own assets and borrow funds in the name of an LLP itself. It is a major advantage that is not available to a regular partnership firm.
Operational Flexibility
LLP Agreement, deed among partners of an LLP, clarifies operating structure including rights and responsibilities of the partners. Typically, LLP would select a “Designated Member” who would control day-to-day operations. It can have individuals or existing businesses as members. Further, this structure allows to clearly define roles of the partners and their respective responsibilities. It could also help in protecting partner’s interest in case of loss because of an unlawful act of any other partner.
Lower Compliance Requirement
A key benefit of registering an LLP over a private company is lesser compliance requirement. It doesn’t have a mandatory audit requirement until a certain level of turnover or contribution. Unlike companies, compliances related to board meetings, statutory meetings, etc. do not apply to LLPs. Professional services for compliance are typically available at cheaper rates than that for companies, making it cost effective to maintain an LLP.
Documents required for registration of an LLP
PAN Card
PAN Card of all partners
Foreign nationals may provide passport
Partners Address Proof
Aadhar Card/ Voter ID/ Passport/ Driving License of all partners
Photograph
Latest Passport size photograph of all partners
Business Address Proof
Latest Electricity Bill/ Telephone Bill of the registered office address
NOC from owner
No Objection Certificate to be obtained from the owner of registered office
Rent Agreement
Rent Agreement of the registered office should be provided, if any
Note
In case of NRI or Foreign National, documents of the partner must be notarized or apostilled