Incorporation of LLP

Benefits of a Limited Liability Partnership (LLP)

  • Liability of each partner is limited to his share as written in the Agreement filed at the time of creation of LLP as compared to Partnership Firms which have unlimited liability.
  • It has a Low Cost of Formation and is Easy to Form.
  • The Partners are not liable for the acts of each other and can be held liable only for their own acts as compared to Partnerships wherein they can be held liable for the acts of their partners as well.
  • Less Restrictions and Compliance are enforced on a LLP by the Govt as compared to the restrictions enforced on a Company.
  • As a Juristic Legal Person, an LLP can sue in its name and be sued by others. The partners are not liable to be sued for dues against the LLP.

Documents required:

Documents of Partners:

  • PAN Card/ ID Proof of Partners – All the partners are required to provide their PAN at the time of registering LLP. A PAN card acts as a primary ID proof.
  • Address Proof of Partners – Partner can submit anyone document out of Voter’s ID, Passport, Driver’s license or Aadhar Card. Name and other details as per address proof and PAN card should be exactly the same. If spelling of own name or father’s name or date of birth is different in address proof and PAN card, it should be corrected before submitting to RoC.
  • Residence Proof of Partners – Latest bank statement, telephone bill, mobile bill, electricity bill or gas bill should be submitted as a residence proof. Such a bill or statement shouldn’t be more than 2-3 months old and must contain the name of the partner as mentioned in the PAN card.
  • Photograph – Partners should also provide their passport size photograph, preferably on white background.
  • Passport (in case of Foreign Nationals/ NRIs) – For becoming a partner in Indian LLP, foreign nationals and NRIs have to submit their passport compulsorily. Passport has to be notarized or apostilled by the relevant authorities in the country of such foreign nationals and NRI, else Indian Embassy situated in that country can also sign the documents.
  • Foreign Nationals or NRIs have to submit a proof of address also which will be a bank statement, residence card or any government issued identity proof containing the address.
  • If the documents are in other than the English language, a notarized or apostilled translation copy will also be attached.

Documents of LLP:

  • Proof of Registered Office Address: Proof of registered office has to be submitted during registration, or within 30 days of its incorporation. If the registered office is taken on rent, rent agreement and a no objection certificate from the landlord has to be submitted. A No objection certificate will be the consent of the landlord to allow the LLP to use the place as ‘registered office’. Besides, anyone documenting utility bills like gas, electricity, or telephone bill must be submitted. The bill should contain the complete address of the premise and owner’s name and the document shouldn’t be older than 2 months.
  • Digital Signature Certificate: One of the designated partners needs to opt for a digital signature certificate also since all documents and applications will be digitally signed by the authorized signatory

Mandatory Compliances for an LLP

  • Filing LLP Annual Return: Annual Return or Form 11 is a summary of an LLP’s Partners and indication of change in the management. Every LLP is required to file Annual Return in Form 11 to the Registrar within 60 days of closer of the financial year i.e. has to be filed on or before 30th May every year.
  • Filing of Statement of Account & Solvency (Filing of Annual Accounts/ Statement of Accounts/ Financial Statements/ P&L & Balance Sheet):
  • LLP must maintain proper books of account. The accounts may be on cash basis or accrual basis.
  • Statement of Solvency (Accounts) needs to be prepared every year ending on 31st March.
  • LLP Form – 8 should be filed with the Registrar of Companies on or before 30th October every year.
  • It should be noted that LLPs / FLLPs whose annual turnover exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to get their accounts audited by auditor of the LLP/ FLLP mandatorily.
  • Filing of Income Tax Return:LLP can file its return of income in ITR 5. it is mandatory for LLP to file return of income electronically under digital signature if its accounts are required to be audited under section 44AB.