Limited Liability Partnership (LLP) Registration

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Meaning of LLP

A Limited Liability Partnership (LLP) is a hybrid business structure combining the operational flexibility of a partnership with the benefits of limited liability, like a company. Under this arrangement, the liability of each partner is limited to the extent of their agreed contribution and does not extend to the misconduct or negligence of other partners.

It is one of the easiest forms of business to incorporate and manage, making it a preferred choice for professionals such as legal firms, accounting consultancies, and wealth managers.

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Key Takeaways

• Limited Liability: Partners are liable only to the extent of their capital contribution.
• Risk Sharing: Risk is divided among partners, leveraging individual skills and competencies.
• Professional Preference: Popular among closely held businesses, especially professional service providers.

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Origin of the Concept

The LLP structure was introduced in India through the Limited Liability Partnership Act, 2008 to provide a business form that is:

• Less complex to operate
• Easy to maintain
• Offers non-rigid operational flexibility like a partnership
• Provides restricted liability protection like a company

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Suitability & Popularity

• Most Suitable For: Professionals, family-owned businesses, and small enterprises.
• Not Suitable For: Businesses planning to raise equity from venture capitalists, angel investors, or private equity funds.

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Features of LLP

• Separate legal entity status.
• Limited liability for each partner.
• Low cost of formation and operation.
• Fewer compliances compared to companies.
• No minimum capital requirement.
• Compulsory audit only if:
  • Contribution > ₹25 Lakhs, or
  • Annual Turnover > ₹40 Lakhs.

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Minimum Requirements to Incorporate an LLP

• Minimum 2 Designated Partners.
• Digital Signature Certificate (DSC) for one designated partner.
• Designated Partner Identification Number (DPIN) for all partners.
• Capital contribution (can be tangible, intangible, or other benefits).
• At least one designated partner must be a resident of India.

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Documents Required

For Partners

• PAN Card or Passport (for foreign nationals).
• Aadhaar, Driving License, Voter ID, or other government-issued ID.
• Latest utility bill or bank statement (within 3 months).

Registered Office Proof

• Ownership proof (electricity bill, gas bill, water bill, property tax receipt).
• If rented, No Objection Certificate (NOC) from the landlord.
• Utility bill (not older than 2 months) showing the address in the owner’s name.

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LLP Registration Process

1. Name Reservation (RUN-LLP on MCA Portal)
   • Apply for two proposed names via MCA’s RUN-LLP form.
   • Ensure no existing trademark conflicts before submission.
   • Name is reserved for 20 days upon approval.
2. Obtain DSC (Digital Signature Certificate)
   • Required for designated partners to digitally sign e-forms.
3. Filing Form FiLLiP
   • Integrated MCA form for DIN allotment, name reservation, and LLP incorporation.
   • Requires partner KYC, subscriber’s sheet, consent forms, and office address proof.
   • Must be signed digitally and certified by a CA, CS, or CMA.
4. Certificate of Incorporation
   • Issued by MCA upon approval of Form FiLLiP.
5. Filing LLP Agreement
   • To be submitted within 30 days of incorporation using Form 3.
   • Should be on stamp paper (value varies by state) and notarized.

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Why Choose LLP?

LLP is a modern, cost-effective business structure with minimal compliance requirements and no minimum capital mandate. For professionals and small business owners, it offers the perfect mix of legal protection and operational flexibility.