What is Limited Liability Partnership?

The LLP full form in income tax is Limited Liability Partnership. The meaning of a limited liability partnership is that it is an entity formed and registered under the Limited Liability Partnership Act, 2008. In short, it can be considered a partnership firm that has been formed under the LLP Act. 

A key feature of LLPs is that they operate as a separate legal entity, similar to companies, and have continuous succession. There are several advantages of LLPs; they offer the benefits of both entity types, namely partnership firms and companies. As it costs less than the companies, it has become a preferred choice for the group of entrepreneurs to conduct business activities. 

What are the Features of LLP?

The features of a limited liability partnership are listed below in this section:

1. The LLPs have a separate legal entity similar to that of companies.
2. The partners who collaborate in the LLP have limited liability up to the amount of their contribution.
3. You can form an LLP at a lower cost than the cost of forming a company.
4. As compared to companies, there are fewer regulations and compliance in LLPs. 
5. For LLPs, there is no need to meet the minimum capital contribution.
6. To constitute an LLP, a minimum of two people are needed, and there is no limit on the maximum people to form LLPs.
7. The partners of LLPs should sign the agreements to govern their duties and rights.

Steps to Register as an LLP

It is very important to register the LLP under the Limited Liability Partnership Act before starting a business under the LLP. The entire process from obtaining the digital signature certificate to registering the LLP takes approximately 15 days. 

Pre-requisites for LLP's Registration

Here are the prerequisites for the registration of the LLPs:

1. It is necessary for the designated partners of the LLPs to have a valid digital signature certificate. In case they don't have it, then obtain a new one. 

2. Two of the selected partners should obtain the Director's Identification Number (DIN).

3. The documents for the partners that should be ready for the submission are: 

• Address proof of the partners.
• Residence proof of partners
• ID proof of partners or PAN Card
• Photograph
• In any case where NRIs/foreign nationals are involved, then Passport. 

4. The documents for the company that should be ready for submission are:

• Certificate for Digital Signature
• Registered Office Address Proof

NOTE:

• The applicant must use the Form for incorporation of a Limited Liability Partnership (FiLLiP). You have submitted this form to the registrar's office, which has jurisdiction over the state in which the LLP is located. You should also pay the fees as per the Annexure. 
• If the partner does not have a DPIN or DIN, this form is used to obtain the Designated Partner's Identification Number (DPIN) for allotment. 
• There is a platform that is used to determine the name of the LLP, which is RUN-LLP. You can also make a reservation for the LLP by using the same form, FiLLiP. After the name is approved, you can use this name as the proposed name of the LLP.
• You should file the LLP agreement by using Form 3 within 30 days of the incorporation. It is available online on the MCA portal. After that, print this agreement on stamp paper to legalise it.