LLP is a new corporate structure that combines the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. In other words, it is an alternative corporate business vehicle that provides the benefits of limited liability of a company, but allows its members the flexibility of organising their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm.

Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular. Internationally, LLPs are the preferred vehicle of business, particularly for service industry or for activities involving professionals.

LLP is governed by the provisions of the Limited Liability Partnership Act 2008, the salient features of which are as follows: -

• The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
• The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act 2008 . The act provides flexibility to devise the agreement as per their choice.
• The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP which may be of tangible or intangible nature or both tangible and intangible in nature. No partner would be liable on account of the independent or un-authorized actions of other partners or their misconduct. The liabilities of the LLP and partners who are found to have acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP.
• Every LLP shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.
• The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
• The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
• The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act 2008.
• A firm, private company or an unlisted public company is allowed to be converted into LLP in accordance with the provisions of the Act. Upon such conversion, on and from the date of certificate of registration issued by the Registrar in this regard, the effects of the conversion shall be such as are specified in the LLP Act. On and from the date of registration specified in the certificate of registration, all tangible (moveable or immoveable) and intangible property vested in the firm or the company, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, and the whole of the undertaking of the firm or the company, shall be transferred to and shall vest in the LLP without further assurance, act or deed and the firm or the company, shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be.
• The winding up of the LLP may be either voluntary or by the Tribunal to be established under the Companies Act, 1956. Till the Tribunal is established, the power in this regard has been given to the High Court.
• The LLP Act 2008 confers powers on the Central Government to apply provisions of the Companies Act, 1956 as appropriate, by notification with such changes or modifications as deemed necessary. However, such notifications shall be laid in draft before each House of Parliament for a total period of 30 days and shall be subject to any modification as may be approved by both Houses.

The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships. 

Advantages of a Limited Liability Partnership:- 

1. As Many Owners As Needed:-One of the greatest things of a limited liability partnership is that there is no limit on the amount of owners that can be involved with the business. This is great because it evenly spreads out the amount of liability that each partner can have if something where to go wrong with the business.

2. Much Less Liability:-Just as the name suggests, limited liability partnerships limit your liability. Since there are multiple owners involved in the business all of the risks of the business are spread out and made much smaller than if a single person was responsible for the business on their own. This generally refers to legal issues, like if the company was sued for any reason.

3. Tax Benefits:-Another one of the great benefits of operating underneath an LLP is how you file taxes. The partnership itself doesn’t have to file taxes as a business, which provides great breaks for the company. However, each individual partner must file a variety of different tax forms regarding the business.

4. Great Flexibility:-Flexibility is a defining characteristic of limited liability partnerships. Each partner in the business has the ability to decide how much they want to contribute and how much of a partner they truly want to be in the business. They are also not obligated to participate in business meetings or consultations with anyone that they do not feel the need to.

DISADVANTAGES OF A LIMITED LIABILITY PARTNERSHIP:-

1. Not All States Are On Board:-Due to the tax benefits and tricky workings of an LLP, some states do no allow them to form or operate in their region. Another big problem is that many states do not recognize LLP’s as a legal business.

2. Additional Taxes:-Just like some states do not recognize, the majority of the rest pose large tax limits on limited liability partnerships. These taxes can come in as additional taxes when registering as well as issues with personal tax filing.

3. Less Business Credibility:-Another huge problem with limited liability partnerships is the fact that other business and many consumers or clients do not see them as a credible business. Corporations gain much more respect and are generally more successful than LLPs.

Major Steps involved for incorporation of LLP:- 

• Getting DSC
• Getting DPIN
• Name Search and application for Name Availability.
• Drafting of Bye Laws (LLP Agreement)
• Filing of various forms.
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Getting DSC

Know About Digital Signature

What is a Digital Signature Certificate (DSC)?

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance program are required to be filed with the use of Digital Signatures by the person authorized to sign the documents. 

Class of DSC

The Ministry of Corporate Affairs has stipulated a Class-II or above category signing certificate for e-filings under MCA21. A person who already has the specified DSC for any other application can use the same for filings under MCA21 and is not required to obtain a fresh DSC.

Required documents for getting DSC:-

• Specified Form filled as per given guidelines
• ID proof of the applicant (Copy of the PAN card should be attested by the Gazetted officer/Bank manager/Post master).
• Address proof (Passport/ Aadhar card/Driving License/Voter Id/ latest Utility Bill like Electricity bill, Telephone bill, Water bill, Gas bill, etc, Property Tax receipt). This needs to be attested by a Gazetted officer/ Bank manager/ Post master.
• Passport size photo(3.5 cm X 2.5 cm)
• Valid Email Id and Mobile No.

Getting DPIN

The concept of a Designated Partner Identification Number (DPIN) has been introduced In Limited Liability Act (2008). As such, all the existing and intending designated partners have to obtain DPIN within the prescribed time-frame as notified.

DPIN is a unique identification number allotted to an individual who is an existing partner of the LLP or intends to be appointed as partner of an LLP. DPIN is an 8 digit number. For example: 02384673.This is allotted by Central Government (office of regional director), Ministry of Corporate Affairs.

Required documents/information’s for Allotment of DPIN:-

• Self attested* copy of the PAN Card
• Self attested* identity proof of the proposed partners (like Voter ID Card/ Valid Driving License/ Valid Passport/ Aadhar Card etc).
• Self attested* Address proof of the proposed partners (like Latest Bank Statement/ Telephone or Mobile Bill/ Electricity Bill etc).
• Passport size color & clear photograph (3.5 cm X 2.5 cm)
• An specified Affidavit by the individual (Declaration by the individual and self attested*)
• Educational Qualification
• Current Occupation
• Valid Email Id and Mobile Number   

*Signature should be same as in PAN card.

Before you fill-in applications for DPIN please remember following common causes of REJECTIONS:-

• Applicant's name and father's name mentioned in abbreviated form: The Name should be expanded even if the ID proof contains the name in abbreviated form.
• Mismatch in the applicant’s name and father's name in DPIN form with the ID (Identity) proof enclosed: Any mismatch in name, including spelling mistake, may lead to rejection of application. Minor spelling deviations in the father's name may be accepted, if such deviations do not materially impact the name.
• Prefixes like Mr/ Ms/ Kumari/ Shri/ etc. used in the applicant's name.
• Residence proof(s) like Bank Statements, Electricity Bill, Telephone Bill, Utility bills, etc, submitted are older than 2 months of submitting the application for verification such documents are in the name of some other person, for example father or spouse.
• The supporting documents are not duly attested by the proposed partners.
• Passport/Driving License/Identity proofs/etc attached is expired: Only such documents which are currently valid should be attached.
• The signature is not the same with the signature in the PAN card.

Name Search and application for Name Availability:-

Next step in the formation of a LLP  is the approval of the name by the Registrar of Companies (ROC) in the State/Union Territory in which the LLP will maintain its Registered Office. This approval is provided subject to certain conditions: for instance,

• There should not be an existing LLP by the same name.
• The first word must contain a noun and the second word must relate to the main object of the proposed LLP.
• The last words in the name are required to be "LLP".
• The application should mention at least two suitable names to maximum 6 names of the proposed LLP, in order of preference

Once LLP name is approved, it is valid for a period of sixty days from the date of application, within that time LLP Agreement together with miscellaneous documents should be filed. If one is unable to do so, an application may be made for renewal of name by paying additional fees.

Information required for seeking Name Approval:-

• Proposed name of the LLP and alternative names (2 to 6 names)
• Names of the proposed partners (minimum 2)
• Authorized share capital
• Main objects of the LLP in brief (200 alphabetic words)
• Address proof for registered office of the proposed LLP
• Address for the nearest police station of proposed registered address of the LLP
• NOC, if the partner is carrying on any Partnership firm, sole proprietary or unregistered entity in the name as applied.
• NOC from the person if the proposed name(s) contain(s) name of any person other than partner(s) or their close blood relatives.
• If the proposed name(s) include(s) the name of relatives then the proof of relationship is also required.

Incorporation Process:-

I. Form 2:-

The following information/documents required in Form 2:-

Get the subscription sheet by all the designated partners in their own handwriting with the following details as per the given order:-

• The name of the designated partners.
• Father’s name of the designated partners.
• Address of the designated partners.
• Occupation of the designated partners 

The subscription sheets of LLP must mention the number of monetary value of the authorized capital shared by the promoters.

A) Consent by the designated partners.

B) Affidavit for non-acceptance of public deposit by all the partners.

C) Address proof for the registered address of LLP.

D) If property is owned by the proposed partners, then:-

• Registered proof in the name of the partner like latest Electricity Bill, Telephone/ Mobile bill, Gas bill, Water Bill.

• NOC from the proposed partner to use the premises.

• If the property is owned by other than proposed partners, then;

• Rent agreement between the land lord and proposed LLP through its proposed partners.

• Registered address proof in the name of the landlord like latest Electricity Bill, Telephone/ Mobile bill, Gas bill, Water Bill.

• NOC from the landlord to use the premises.

• Rent Receipt 

II. After this, incorporation certificate having CIN (corporate identification number) like AAD-1919 will be obtained.

III. After getting Certificate of Incorporation, Form 3 is uploaded with notarized LLP Agreement in specified format to get approval from ROC.

IV. The certificate of incorporation will be required while opening the current bank account in LLP name.

Documents/Information Required During Process:-  

Following documents/ forms need to be submitted along with requisite fee which is based on the amount of authorized capital as under:

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