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When it comes to a discussion on the types of companies in India for micro and small businesses, the usual choice is sole proprietorship (though does not have company status legally) and One Person Company. But, have you also considered the option of a Limited Liability Partnership (LLP) business? There are some basic eligibility criteria and procedure on how to register an LLP business, and in this article we will take a look at the same.
What is an LLP business?
Limited Liability Partnership (LLP) is a hybrid type of company registration that gives the advantages of a partnership company and limits liabilities similar to a limited company.
Partners in an LLP company are collectively responsible for all acts that the business undertakes. LLP business registration has gained popularity among micro business setups since it was introduced by the government in 2008 under the Limited Liability Partnership Act.
Eligibility criteria for LLP registration
- Minimum of two partners are required. There is no limit on the maximum number of partners.
- The minimum age required is 18 years.
- Although NRIs and foreign nationals can become partners, however at least one partner has to be an Indian.
- There is no specified limit on minimum or maximum capital contribution.
How to register an LLP business?
The process of registering an LLP company is completely online. Here is a step-by-step guide for LLP business registration.
To register an LLP company you will first have to obtain a digital signature certificate (DSC) of all designated partners. Since the registration process is online, documents need to be signed by a DSC. In fact, the use of DSC is not limited to LLP registration. DSC is also used in e-tendering, signing e-invoices, Form 16 and other digital documents.
DSC can easily be obtained through government approved certifying authorities (CA) like eMudhra, V-Sign (Verasys), NSDL, SafeScrypt, National Informatics Center (NIC), etc. It takes around 15 days to get DSC. Once you obtain DSC, here are the steps for LLP registration.
Step 1: First step for registration is reserving a name for the company. For this, you need to fill in Reserve Unique Name- Limited Liability Partnership (RUN-LLP) on the website of the Ministry of Corporate Affairs (MCA). While filling in RUN-LLP, you have to propose two names for your company. Moreover, a payment of ₹200 has to be made for name registration.
Once the RUN-LLP is submitted, it goes to the registrar for approval. The registrar approves the name which is not the same or very similar to any existing LLP business.
Step 2: Once the name is approved, a Form for Incorporation of Limited Liability Partnership (FILLIP) needs to be filled in. While filling in this form, you need to submit the required documents and pay the fee as per Annexture A. Fee structure depends on the capital contribution. A list of required documents and details of the fee structure is provided in the following sections.
This form also has a provision to apply for Designated Partner Identification Number (DPIN) to the designated partner.
Step 3: The next step is to file an LLP agreement. Once the company is incorporated; the agreement is to be filed in Form 3 on the MCA portal. Form 3 along with the agreement has to be filed within 30 days of incorporation of the business.
The LLP agreement is an agreement between partners defining the duties and rights of the partners. Under the Limited Liability Partnership Act, 2008, it is mandatory to draw the agreement while registering the business. There has to be a physical copy of the LLP agreement, printed on stamp paper. Stamp duty varies depending on the state where LLP is being formed.
A quick guide to the forms you need to fill in for LLP registration
|Name of the form||Purpose|
|Reserve Unique Name- Limited Liability Partnership (RUN-LLP)||For reserving a unique name for the LLP business|
|Form for incorporation of LLP (FILLIP)||For incorporation of the LLP business|
|Form 3||For filing the LLP agreement|
|Form 5||For converting an existing firm into an LLP company|
Documents required for LLP registration
Here is a list of documents to be submitted for LLP registration
- ID proof of all the partners
- PAN Cards of all partners
- Address proof of all partners – Passport, Voter ID, driving license, etc.
- A passport size photo against the white background
- If an NRI or a foreign national is one of the partners, then the passport of the same partner is mandatory
- Digital signature certificate
- Proof of registered office. If the registered office is in the rented place, one needs to submit a NOC from the landlord.
The cost involved in an LLP registration process
Following are various charges to be paid for the registration of an LLP business.
- Digital signature certificate – ₹1500-2000 (depends on the number of DSCs required and Class of DSC)
- Name registration charges – ₹200
- Incorporation fee: This fee depends on the capital contribution of each partner. Here are the details.
|Capital contribution||Incorporation fee|
|Up to ₹1 lakh||₹500|
|From ₹1 lakh to ₹5 lakh||₹2000|
|From ₹5 lakh to ₹10 lakh||₹4000|
|Above ₹10 lakh||₹5000|
- Stamp paper: Stamp paper duty varies from state to state.
- Fee for filing the agreement: It varies on the basis of capital contribution. If the LLP agreement is not filed in 30 days, a penalty of ₹100 per day is charged for the delay.
|Capital contribution||Filing fee|
|up to ₹1 lakh||₹50|
|From ₹1 lakh to ₹5 lakh||₹100|
|From ₹5 lakh to ₹10 lakh||₹150|
|Above ₹10 lakh||₹200|
Note: If you seek help of an agent or consultant, their charges will be additional.
Frequently asked questions about LLP business
Here are some of the frequently asked questions and their answers.