LLP Incorporation Online

LLP or Limited Liability Partnership is a Legal form of Business that is becoming increasingly popular in India. An LLP combines the advantages of both a traditional partnership and a limited liability company, offering greater flexibility and reduced legal liabilities to its partners. If you are planning to start an LLP, here is a comprehensive guide to help you understand the process of LLP incorporation.

What is LLP Incorporation? LLP incorporation refers to the process of registering a Limited Liability Partnership in India. It involves several steps, including obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), filing of the LLP registration form, and payment of the registration fee.

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Documents Required for LLP Incorporation:

The Following are the Essential Documents Required for LLP incorporation in India:

1. Identity Proof: PAN Card, Passport, Driving License, Voter ID Card
2. Address Proof: Telephone Bill, Electricity Bill, Gas Bill, Bank Statement
3. Residential Proof: Rent Agreement, Property Papers, No Objection Certificate (NOC)
4. Digital Signature Certificate (DSC) of the designated partners
5. Consent to become Designated Partner in Form DIR-2
6. LLP Agreement

Procedure for LLP Incorporation:

The Following is a step-by-step Procedure for LLP incorporation in India:

1. Obtain Digital Signature Certificate (DSC): The first step in LLP incorporation is to obtain a DSC for the designated partners. A DSC is required to sign the incorporation documents electronically.
2. Obtain Director Identification Number (DIN): The second step is to obtain a DIN for the designated partners. DIN is a unique identification number required for all individuals who wish to become directors of a company or an LLP.
3. Name Reservation: The third step is to reserve a name for your LLP. You can apply for name reservation through the RUN-LLP form on the MCA portal.
4. File LLP Registration Form: After name reservation, the next step is to file the LLP registration form (FiLLiP) on the MCA portal.
5. Payment of Registration Fee: Once the form is filed, the LLP registration fee must be paid online through the MCA portal.
6. Draft LLP Agreement: Once the LLP registration form is approved, the next step is to draft an LLP agreement. The agreement must be signed by all partners and filed with the MCA within 30 days of incorporation.
7. Issue Certificate of Incorporation: After the LLP agreement is filed, the MCA will issue a Certificate of Incorporation, and the LLP will be considered a legal entity.

Benefits of LLP Incorporation:

1. Limited Liability Protection: The partners of an LLP have limited liability protection, which means that their personal assets are not at risk if the business incurs any losses or faces legal liabilities.
2. Separate Legal Entity: An LLP is considered a separate legal entity, which means it can own property, enter into contracts, and sue or be sued in its own name.
3. Tax Benefits: An LLP is taxed as a partnership, which means that the profits are taxed at the individual partner’s tax rate. Additionally, an LLP is not subject to Dividend Distribution Tax (DDT).
4. Flexibility: An LLP offers greater flexibility in terms of management and ownership. The partners can choose to manage the business themselves or appoint a designated partner to manage it.

Tax Benefits for LLP Company

An LLP (Limited Liability Partnership) enjoys several tax benefits that make it a preferred choice for entrepreneurs and business owners. Some of the tax benefits of an LLP company are:

1. Lower tax rate: LLPs are taxed at a flat rate of 30% (plus surcharge and cess) on their total income. This is lower than the tax rate of 34% (plus surcharge and cess) applicable to partnership firms.
2. No dividend distribution tax: LLPs do not need to pay dividend distribution tax (DDT) on profits distributed to partners. In a partnership firm, DDT is levied at 15% (plus surcharge and cess) on profits distributed to partners.
3. Tax benefits for partners: LLP partners are taxed as individuals, and their share of profits is taxed at their individual tax rate. This is beneficial for partners who are in lower tax brackets.
4. Tax deductions: LLPs are eligible for several tax deductions, such as deductions for contributions to charitable institutions, contributions to pension schemes, and payment of life insurance premiums.
5. Carry forward of losses: LLPs can carry forward losses for up to 8 years, and set them off against future profits. This helps in reducing the tax liability of the company.
6. No minimum alternate tax: LLPs are exempt from the applicability of Minimum Alternate Tax (MAT), which is a tax levied on companies that are eligible for tax incentives and deductions under the Income Tax Act.

Overall, an LLP provides several tax benefits to its partners, making it an attractive business structure for entrepreneurs and small business owners. However, it is recommended to consult with a tax professional before making any decisions regarding tax planning and structuring of a business.

LLP vs Partnership Company Comparison

Frequently Asked Questions (FAQs) Regarding LLP incorporation:

1. What is an LLP?

• An LLP or Limited Liability Partnership is a form of legal entity where the partners enjoy limited liability for the actions of the LLP. It is governed by the LLP Act, 2008.

2. Who can form an LLP?

• An LLP can be formed by a minimum of two designated partners. There is no restriction on the maximum number of partners.

3. What are the documents required for LLP incorporation?

• PAN Card of all the partners
• Address proof of all the partners
• Passport size photograph of all the partners
• Proof of registered office address
• Digital Signature Certificate (DSC) for at least one designated partner
• Director Identification Number (DIN) for all the designated partners

4. What is the process of LLP incorporation?

• Obtain DSC and DIN
• Name reservation
• File LLP Agreement and other incorporation documents with ROC
• Obtain Certificate of Incorporation

5. What is the minimum capital required for LLP incorporation?

• There is no minimum capital requirement for LLP incorporation.

6. Can an LLP be converted into a private limited company?

• Yes, an LLP can be converted into a private limited company.

7. Is it mandatory to have a LLP Agreement?

• Yes, it is mandatory to have a LLP Agreement.

8. What are the tax benefits of LLP?

• LLPs are taxed as a partnership firm, which means they are not subject to dividend distribution tax. The partners are taxed only on their share of profit. Additionally, there is no tax on the remuneration paid to partners.

9. What are the annual compliance requirements for LLPs?

• LLPs are required to file Annual Return and Statement of Accounts and Solvency with the ROC. They are also required to maintain proper books of accounts.

10. Can a foreigner be a partner in an LLP?

• Yes, a foreigner can be a partner in an LLP, subject to the provisions of the Foreign Exchange Management Act (FEMA) and other applicable laws.

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How Startupguruz can help to get Register in LLP Company ?

Startupguru can help you register your LLP by providing end-to-end services, from filing the necessary documents to obtaining the registration certificate. Here’s how we can help:

1. Consultation: StartupGuruz offers consultation services to help you understand the benefits and requirements of LLP incorporation. They can advise you on the eligibility criteria, capital structure, and other legal formalities related to LLP registration.
2. Document Preparation: We can assist you in preparing the necessary documents for LLP registration, including the LLP agreement, partnership deed, and other required forms and affidavits.
3. Filing of Forms: StartupGuruz can file the required forms with the Registrar of Companies (ROC) on your behalf. This includes Form LLP-1 for incorporation, Form LLP-2 for the appointment of designated partners, and Form LLP-3 for the change in partners.
4. Certificate of Incorporation: Once the ROC approves your application, StartupGuruz will help you obtain the Certificate of Incorporation, which is the legal proof of your LLP’s existence.
5. Post Incorporation Compliance: After incorporation, StartupGuruz can also assist you with ongoing compliance requirements such as filing annual returns, maintaining statutory registers, and conducting regular meetings.