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Limited Liability Partnership

A Limited Liability Partnership (LLP) is a type of business structure that combines the benefits of a partnership with the advantages of limited liability of a company. In an LLP, the partners have limited liability, meaning they are not personally responsible for the debts of the business. This structure also offers flexibility in terms of organizing the internal structure and operation of the business based on a mutually arrived agreement.

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Why Choose a LLP Company?

✔ Startups & Small Businesses (wanting limited liability).
✔ Professionals (CA, lawyers, architects, consultants).
✔ Family Businesses (protecting personal assets).
✔ Joint Ventures (flexible profit-sharing structure).

Advantages of an LLP

  • Limited Liability – Personal assets are safe.

  • Lower Compliance Burden – Fewer regulations than a company.

  • Tax Benefits – Taxed at 30% (no dividend distribution tax).

  • Easy to Start & Operate – No board meetings or complex formalities.

  • Credibility – More trusted than a sole proprietorship or partnership.

Key aspects of LLP Registration

  • A minimum of two partners is required to form an LLP. There is no maximum limit on the number of partners.

  • At least two designated partners are necessary, and at least one of them must be a resident of India.

  • There is no minimum capital contribution required to start an LLP. The partners decide on the capital contribution.

  • The partners must obtain a Digital Signature Certificate (DSC) as all filings are done online and require digital signatures. A Class 3 category DSC is usually preferred.

  • Designated Partners need to obtain a Designated Partner Identification Number (DPIN). This can be applied for using Form DIR-3. Existing Directors Identification Numbers (DIN) can also be used as DPIN.

Steps to Start a LLP Company 

  • Obtain DSC and DPIN: The first step involves obtaining DSC for all designated partners from a government-recognized certifying agency. Following this, apply for DPIN for all designated partners who do not have a DIN.

  • Name Approval: Reserve a unique name for the proposed LLP using the RUN-LLP (Reserve Unique Name-Limited Liability Partnership) form on the Ministry of Corporate Affairs (MCA) portal. It's advisable to check the MCA portal for similar existing names before applying. You can provide up to two proposed names. The name should end with "Limited Liability Partnership" or "LLP". Once approved, the name is reserved for three months.

  • Incorporation of LLP: File the FiLLiP (Form for incorporation of Limited Liability Partnership) with the Registrar of Companies (RoC) in the state where the LLP's registered office is located (in your case, Tamil Nadu). This form also allows for applying for DPIN for up to two individuals who will be appointed as designated partners and do not have one. If the name was already approved via RUN-LLP, it should be mentioned in this form.

  • LLP Agreement: After the LLP is incorporated, an LLP Agreement must be drafted and filed in Form 3 on the MCA portal within 30 days of the date of incorporation. This agreement outlines the mutual rights and duties of the partners and between the LLP and its partners. It needs to be printed on stamp paper, the value of which varies by state.

  • Other Registrations: After receiving the Certificate of Incorporation, the LLP should apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). Depending on the business activities and turnover, Goods and Services Tax (GST) registration might also be required

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  • Documents Required:

    • For Partners:

      • PAN Card (mandatory identity proof)

      • Address proof (Aadhaar card, Voter ID, Driving License, Passport, latest bank statement, or utility bill - not older than 2 months)

      • Passport-sized photographs

      • For NRIs/foreign partners, a copy of their passport, duly certified.

    • For Registered Office:

      • Proof of registered office address (utility bill like electricity or water bill, or property tax receipt - not older than 2 months)

      • Rental agreement or lease deed, if the premises are rented.

      • No Objection Certificate (NOC) from the landlord if the property is rented.

    • Other Documents:

      • Digital Signature Certificates (DSC) of all designated partners.

      • Declaration and consent of the proposed partners (Form DIR-9).

      • LLP Agreement.

  • Fees: The government fees for LLP registration depend on the capital contribution:

    • Up to ₹1 lakh: ₹500

    • ₹1 lakh to ₹5 lakhs: ₹2,000

    • ₹5 lakhs to ₹10 lakhs: ₹4,000

    • Above ₹10 lakhs: ₹5,000

    Additional costs include:

    • Digital Signature Certificate (DSC) costs, which can vary.

    • Stamp duty on the LLP agreement, which varies by state.

    • Professional fees for drafting the LLP agreement and assistance with the registration process, which can range from ₹2,000 to ₹10,000 or more depending on the service provider and complexity.

    • Name reservation fee (RUN-LLP): ₹200 per application.

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Compliance: After registration, LLPs are required to file annual returns (Form 11) and a statement of accounts and solvency (Form 8) annually with the MCA. Failure to file these within the stipulated time can result in penalties. An audit of accounts is required if the annual turnover exceeds ₹40 lakhs or the capital contribution exceeds ₹25 lakhs

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