Steps for LLP Registration In India

Limited Liability Partnership (LLP) is a popular business structure in India that offers the benefits of limited liability of a company along with the flexibility of a partnership. LLP registration has become attractive for small and medium enterprises fees for registration of private limited company, startups, professional service providers, and family-owned businesses. The LLP Act 2008 governs LLP registration in India. The process is regulated by the Ministry of Corporate Affairs and involves a few key steps. Here is a look at the step-by-step process for LLP registration in India.

Steps for Name Approval

One of the first steps is securing approval for the proposed LLP name. The name applied for LLP registration should not be identical or closely resemble an existing company or LLP name. The name should also correctly reflect the nature of business to be carried out. The application for name approval can be filed online on the MCA portal along with a fee of Rs 1000. Up to 6 name options can be proposed, out of which 1 name will be approved if it meets the guidelines. The approval is provided in the form of a RUN (Reserve Unique Name) letter.

Documents Required for LLP Registration

The following documents are required for incorporating an LLP:

• LLP Agreement – This is like the Memorandum of Association of a company. It specifies the mutual rights and duties of partners along with other terms governing the LLP.
• Information with respect to partners and designated partners like name, address, occupation, etc.
• Consent of partners to act as designated partners. Designated partners are responsible for compliance and represent the LLP legally.
• Address proof of the registered office of the LLP.
• Optional documents like Power of Attorney, declarations, affidavits, etc.

Drafting of LLP Agreement

The LLP Agreement lays down the terms of operation of the LLP and has to be carefully drafted. Some key aspects that the LLP agreement covers are:

• Name & registered office address of LLP
• Nature of business
• Terms of admission, retirement, resignation of partners
• Rights & duties of partners
• Distribution of profits and losses
• Maintenance of books of accounts
• Holding of meetings
• Appointment of auditors
• Indemnification of partners
• Dissolution of LLP

The LLP agreement has to be printed, signed and submitted during registration.

Filing of LLP Registration Documents

The LLP registration documents have to be electronically filed on the MCA portal. The documents required are:

• Form FiLLiP (Form for incorporation of LLP)
• Copy of RUN letter approving LLP name
• Draft LLP agreement
• Details of partners & designated partners
• Proof of registered office address
• Subscription sheet and consent letters
• Affidavits & declarations

The applicable registration fee also has to be paid online.

Approval from Registrar of Companies

Once the e-forms and documents are submitted on MCA portal, the application for LLP registration is scrutinized by the Registrar of Companies (RoC).

If any clarifications are required, the RoC office will raise a query and provide a timeframe for response. Any deficiencies in documentation have to be rectified within the prescribed time.

Once satisfied, the RoC will approve the LLP registration by issuing a Certificate of Incorporation. This certificate is the ultimate proof that the LLP stands registered under the LLP Act.

Obtaining LLPIN and PAN

After incorporation, the next steps are to obtain the LLP Identification Number (LLPIN) and Permanent Account Number (PAN).

The LLPIN is a unique 21-digit identification number allotted to the registered LLP. It has to be mentioned on all letters, invoices, notices and other official documents of the LLP.

The PAN has to be obtained by filing Form 49A and linking the designated partners’ PAN details. The PAN will be required for opening a bank account, ITR filing and other compliance purposes.

Step for Drafting the LLP Agreement

The LLP Agreement is an important document that details the mutual understandings between partners on how the LLP will function. Some key clauses to be included in the LLP Agreement are:

1. The LLP’s objectives – This outlines the scope of activities and business verticals the LLP intends to pursue.
2. Rights and duties of partners – This specifies the roles and responsibilities partners have towards the LLP.
3. Profit and loss sharing ratios – The mechanism for distributing profits or absorbing losses.
4. Remuneration payable to partners – Salaries, allowances, reimbursements, etc. entitled to partners.
5. Meetings of partners – Frequency, quorum, voting rights, etc. for holding meetings.
6. Capital contribution of partners – The capital investment made by partners at the time of joining the LLP.
7. Books of accounts – The accounting standards and financial year to be followed.
8. Admission of new partners – The procedure for inducting a new partner.
9. Retirement and resignation of partners – Grounds and process for a partner’s exit.
10. Dissolution of the LLP – Circumstances under which the LLP can be dissolved.

The LLP agreement has to be carefully drafted after consulting all partners. It forms the foundation for the LLP’s operations.

Obtaining Digital Signature Certificate

A digital signature certificate (DSC) is mandatory for filing the LLP registration documents electronically on the MCA portal.

Two designated partners must obtain a class 2 digital signature from authorized agencies approved by the Controller of Certification Authorities.

The DSC should be in the name of the designated partners and used to affix their digital signatures on the e-forms and documents. The DSCs are essential for completing the e-filing process.

Opening PAN and TAN for LLP

The newly registered LLP must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN):

• PAN – This 10-digit alphanumeric number is issued by the Income Tax department for purposes of ITR filing, tax payments, and TDS/TCS compliance.
• TAN – It is required for TDS filing on payments made for professional services availed by the LLP.

Both PAN and TAN have to be applied for in the official forms prescribed by NSDL within the stipulated timelines after LLP registration. The numbers have to be mentioned on all tax-related documents.

Pening a Bank Account for LLP

A current bank account must be opened in the name of the LLP using the Certificate of Incorporation and LLPIN allotted.

This bank account will be used for all financial transactions of the LLP business, including receipt of capital contribution from partners.

The bank account has to be opened with a minimum of two designated partners as authorized signatories. The registered office address must also be updated with the bank.

Complying with Post Registration Requirements

After completing LLP registration, some post registration compliances are required as per LLP Act:

• Informing ROC of changes in partners or registered office within 30 days
• Filing Annual Return (Form 11) with ROC within 60 days of financial year end
• Filing Annual Accounts in Form 8 with ROC within 30 days of Annual General Meeting
• Issuing appointment letters to designated partners
• Maintaining statutory registers and records
• Convening partners’ meetings as per LLP Agreement

Conclusion

LLP registration in India requires several procedural formalities to be completed in proper sequence. Advance planning is essential before filing for LLP  private limited company registration cost on the MCA portal. A registered LLP confers multiple advantages like limited liability, tax benefits and credibility. However, appropriate compliance as per LLP Act has to be ensured post registration. Proper documentation and partner consents are vital for smooth processing of LLP registration and commencing operations.