Limited Liability Partnerships, or LLPs, have become increasingly popular among entrepreneurs and small business owners as they offer the benefits of both a partnership and a company. An LLP is a legal entity separate from its partners, and its liability is limited to the amount of capital contributed by the partners. In this article, we will discuss the process for LLP registration in 2023.
The following documents are required to be submitted along with the application for incorporation:
- LLP agreement
- Proof of registered office address
- Partners’ identity proof and address proof
- Partners’ PAN card
- Consent to become a partner
- Specimen signature of partners
- Form 2 – Statement of subscribers
- Form 3 – LLP agreement
LLP registration process
Step 1: Name Reservation
The first step in registering an LLP is to reserve the desired name of the LLP. This can be done by submitting Form RUN-LLP on the MCA (Ministry of Corporate Affairs) portal. The name must comply with the guidelines provided by the MCA, and it must not be similar to the name of any existing company or LLP. Once the name is approved, it will be reserved for 20 days, during which time the LLP must be registered.
Step 2: Obtaining Digital Signature Certificates (DSC)
The second step is to obtain Digital Signature Certificates (DSC) for all partners of the LLP. DSC is required for digitally signing the documents required for registering an LLP. The DSC can be obtained from any of the certified agencies authorized by the Controller of Certifying Authorities (CCA). The DSC can also be obtained online through the MCA portal.
Step 3: Obtaining Director Identification Number (DIN)
Next, all designated partners of the LLP must obtain a Director Identification Number (DIN) by submitting Form DIR-3 on the MCA portal. DIN is a unique identification number allotted by the Central Government to an individual intending to become a director of a company or an LLP.
Step 4: Filing LLP Agreement
The LLP agreement is a crucial document that outlines the rights, duties, and obligations of all partners of the LLP. It must be filed within 30 days of the LLP’s incorporation. The LLP agreement can be executed on non-judicial stamp paper, and the stamp duty varies from state to state. Once the agreement is signed, it must be filed with the Registrar of Companies (ROC) along with Form 3.
Step 5: Filing Form 2
Form 2 must be filed within 30 days of the LLP’s incorporation. This form contains all the details of the LLP, such as the registered office address, details of all partners, and their contribution to the LLP. The form must be digitally signed by a designated partner and filed with the ROC.
Step 6: Payment of Fees
The final step is to pay the prescribed fees for registering an LLP. The fees are calculated based on the LLP’s contribution, and they must be paid online through the MCA portal. Once the fees are paid, the ROC will issue a Certificate of Incorporation, which signifies the completion of the LLP registration process.
Other Important Pointers
Selection of Partners
It is essential to select the partners carefully before registering an LLP. An LLP can be registered with a minimum of two partners, and there is no limit to the maximum number of partners. Partners can be individuals or other legal entities, such as companies or LLPs.
Once the LLP is incorporated, it is required to comply with various statutory and regulatory requirements. These include maintaining proper books of accounts, filing annual returns, and paying taxes. It is essential to engage the services of a qualified professional, such as a chartered accountant or company secretary, to ensure compliance with all the legal requirements.
The LLP agreement
LLP Agreement: An LLP agreement is a legal document that outlines the terms and conditions of the partnership between the partners. It includes details such as profit-sharing ratio, capital contributions, management structure, and dispute resolution mechanism. The LLP agreement needs to be drafted and signed by all the partners before submitting the application for incorporation.
Conversion of Partnership Firm into LLP
A partnership firm can also be converted into an LLP by following the conversion process prescribed under the LLP Act, 2008. The Partnership Firm into LLP conversion process involves obtaining consent from all the partners, obtaining a valuation report of the assets and liabilities of the partnership firm, and filing an application for conversion with the ROC. The LLP agreement needs to be drafted and signed by all the partners before submitting the application for conversion.
The process of registering an LLP in 2023 involves six simple steps, starting from reserving the desired name of the LLP to obtaining a Certificate of Incorporation. It is essential to ensure that all the documents are accurately filled and filed within the prescribed timelines to avoid any penalties or legal consequences. An LLP provides several benefits to entrepreneurs and small business owners, including limited liability and tax benefits, making it an attractive option for those looking to start a business. With the ease of registration and the flexibility it offers, LLPs are likely to continue being a popular choice for entrepreneurs in the years to come.