LLP (Limited Liability Partnership)
LLP is a newly defined corporate base structure that combines features of both Company and Partnership. It is linked to company as it includes limited liability and works on partnership in defining flexible and mutual agreement among partners. As the name suggests, LLPs are limited liability oriented firms in which partners are only liable to pay only a specific amount defined in their partnership agreement after getting their partnership registered under Limited Liability Act 2008.
LLP to present entrepreneurs is becoming a top most choice to register their new companies because of its cost effective and less restricted environment, as leveraging the initial investment to zero and excluding the restriction to maximum member inclusion; it is being preferred more than a company status.
Key features of LLP :-
1. Minimum 2 Members: To start a business in LLP format minimum 2 members are required just like a normal partnership guided by Partnership Act 1932, while there is no such restriction on maximum number of partners.
2. Separate Legal Entity: In an LLP, all legal operations are carried out considering the LLP as a separate entity existing separately from its members which can sue or can be sued.
3. Audit Status: Audit procedure to an LLP is only refined to organizations working with an annual turnover of Rs 40 lakh or is built on a contribution of Rs 25 lakh or more to capital.
4. Individuality to Members: LLP defines some special rights to its partners highlighting that no partner in any case would be liable for any other partner causing any mis-happening or misconduct to business or business agreement giving each partner a special individuality.
How to register a new LLP ?
To register a new LLP business some pre conditions defined by Ministry Of Corporate Affairs (MCA) are needed to comply with. MCA has limited their new procedure of LLP registration to a few step drive through their online portal MCA.gov.in which is as follows :
Step 1 : Applying for a DPIN and DSC :
DPIN (Designated Partner Identification Number) is a unique number allotted to each partner associated with LLP and is used while applying for DSC (Digital Signature Certificate) and submitting LLP documents to MCA. For a DPIN number each partner has to submit a “DIN-3 e-form” to mca.gov.in portal.
DSC (Digital signature certificate) can be obtained by filling an online form on MCA
website with a DPIN number allocated .Apply for DSC here
Step 2: Filing an E-form for Registering to MCA portal :
For a new user to apply for a company /LLP registration need to register himself with the MCA website. For this an e-form located at this address (e-form) is to be submitted with the required details, which enables the user to log-in to website in future also.
Step 3: Applying for Incorporation and Submitting LLP agreement:-
With DPIN and DSC, Form-1 and Form -2 are to be submitted to the MCA portal describing LLP name and Incorporation details respectively, which are available in their LLP Incorporation section. On approval to online registration a mail confirmation is delivered to applicant defining their pending status to “Approved”.
Within 30 days of mail confirmation applicant need to submit Form -3 defining all details of LLP agreement for completing the registration process.