When it comes to starting a business venture in India, it is crucial to choose the right business form. It can significantly impact your daily operations, administration of taxation, and management of liabilities. An often-preferred legal form, which may be of assistance in a specific situation, is a Limited Liability Partnership (LLP). Its validity, legal protection, and flexibility render it popular among professionals, business starters, and small enterprises.
This form of entity structure is very popular amongst Indian professionals and new-age businesses who are opting to form limited liability partnerships (LLPs) to take advantage of the typical Indian partnership with a flavor of corporate entity governed under the rules and regulations of the Ministry of Corporate Affairs (MCA).
This comprehensive guide will explain what an LLP is, what its benefits are, who can form one, what documents are required for its incorporation, a step-by-step guide on how to register, and what compliances need to be done post-incorporation. In addition to that, this guide also demonstrates how Legal N Tax can help in hassle-free LLP registration in Delhi.
What is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership (LLP) is a contemporary Indian business structure that combines the limited liability protection of a company and the flexibility of a conventional partnership. Brought forth under the LLP Act, 2008 and governed by the Ministry of Corporate Affairs (MCA), LLP has a separate legal existence—i.e., the LLP can own assets, enter contracts, and sue and be sued under its name. The prime benefit is that partners' assets are not vulnerable to the firm's debts or liabilities. The LLP is thus perfect for professionals and entrepreneurs who are looking for a low-risk, flexible, and legally recognized mode to carry on business together.
Benefits of LLP Registration in Delhi
Indian business owners, before setting up an entity, check all the pros and cons of each entity structure and then come up with a decision as to which form of entity would be beneficial for their respective business. Below are the reasons why LLP registration in Delhi is an innovative and strategic choice.
- Limited Liability Protection – One of the significant benefits of opening an LLP is the protection of liability. Each of the partners is only liable for his or her respective contribution. It ensures their assets are safeguarded against the potential damages, losses, or liabilities assumed by the LLP.
- Independent Legal Entity – Unlike partners, an LLP is a separate and independent entity as far as law is concerned and is allowed to own assets, enter into binding agreements, and pursue lawsuits on its own.
- No Minimum Contribution Requirement – There is no minimum contribution requirement to establish an LLP. Partners can contribute anything, including assets, skills, or services.
- Low Compliance Needs – Limited Liability Partnerships are easier to manage, having fewer LLP annual compliances than private limited companies, which makes them ideal for startups and small businesses aiming to reduce administrative expenses.
- Tax Benefits for LLPs in India- LLPs are taxed as partnerships and do not pay Dividend Distribution Tax (DDT). Also, there's no requirement for mandatory audits if turnover and contribution stay within the prescribed limits.
- Management Flexibility in LLP- The structure and functioning of an LLP are governed by the LLP Agreement, which allows the partners to define their roles, responsibilities, and decision-making powers to suit their business model best.
Who Should Register an LLP?
An LLP is a perfect choice for startups, owner-managed enterprises, professionals, and small to medium-sized businesses that want flexibility combined with liability security. Business people who work in law, finance, accounting, IT, and consulting fields prefer LLPs because these can protect one's assets against business hazards and minimize procedural complexity and expenses over and above those of a private limited company. LLPs suit businesses having several founders or promoters, providing well-defined roles and responsibilities without extensive compliance obligations. These are most beneficial to those who prefer limited liability but no preference for red tape and increased statutory fees associated with a Pvt Ltd company. If simplicity of administration, affordability, and protection against risk are your primary needs, registering your business as an LLP is perfect.
Step-by-Step Process for LLP Registration Services in Delhi
Step 1: Obtain Digital Signature Certificates (DSC)
Every authorised partner has to procure DSCs for e-signing MCA portal forms and online documents. It is a one-time and compulsory requirement for digital authentication.
Step 2: Obtain Director Identification Number (DIN)
A DIN is a prerequisite for all licensed partners. If a DIN is already available, skip this step. If no DIN is available, DIN can be applied for directly through the incorporation form (Form FiLLiP), and hence, a separate application (Form DIR-3) is not generally required during LLP registration.
Step 3: Name Reservation (RUN-LLP)
Book a unique and viable LLP name through the MCA portal's RUN-LLP (Reserve Unique Name) facility. The name must be as per MCA norms and not resemble already incorporated entities or trademarks. Sanction is usually rapid, and you can provide alternatives for other names, if needed.
Step 4: Filing Incorporation Documents (Form FiLLiP)
File the electronic form of incorporation (FiLLiP) on the MCA website. The form is now available for a concurrent procedure: name-approval application, where not already submitted, and DIN for new designated partners.
Details required include:
- Approval of name (or suggest a new one in FiLLiP)
- Address of registered office
- Details of partners and authorised partners
- Partner contributions
- Declaration and agreement of all the partners
- Pay the applicable registration fees based on LLP capital.
Step 5: Certificate of Incorporation
Upon the approval of documents, the Registrar of Companies (RoC) issues the Certificate of Incorporation. The certificate confirms the existence of the LLP under the law and assigns the LLP Identification Number (LLPIN).
Step 6: Filing of LLP Agreement (Form 3)
Prepare and sign the LLP Agreement, including profit sharing, roles of partners, and rules of management. Fill Form 3 on the MCA website within 30 days of the date of incorporation. The agreement has to be on stamp paper and authenticated by a notary.
Step 7: Compliance After
- Open a current bank account under the name of the LLP.
- Register for GST, if applicable.
- Keep accurate books of accounts and complete regular statutory and year-end filing obligations.
Documents Required for LLP registration in Delhi
Here is the complete list of documents required for LLP registration:
Post-Registration Annual Compliance for LLPs
Once the LLP is incorporated, it must follow certain ongoing legal compliances:
Annual Filings
Form 11 is for Annual Return (within 60 days of the end of the financial year)
Form 8 is for Statement of Accounts and Solvency (within 30 days of 6 months from the financial year end)
Income Tax Filing
LLPs must file an Income Tax Return (ITR-5) every year, regardless of profit or turnover.
GST Registration (if applicable)
If turnover exceeds ₹20 lakhs (₹10 lakhs in special category states) or for specific interstate transactions, GST registration is mandatory.
Other Event-Based Compliances
Any changes in partners, contribution, agreement, or office address must be reported to the MCA via specific forms.
Common Challenges in LLP Registration
Business owners frequently encounter the following challenges, even if it is a basic structure:
- Name approval or paperwork mistakes leading to delays
- Creating an appropriate and legally sound LLP Agreement
- Dealing with post-compliance obligations after registration
This is why consultants for LLP registration in Delhi can save time, prevent rejections, and ensure smooth registration of your LLP.
How Legal N Tax can Simplify your LLP Registration?
At Legal N Tax, our skilled consultants for LLP registration in Delhi make the whole procedure easy, swift, and hassle-free. When starting up, your priority must be the development of your product or service, not legal formalities. From providing a no-cost consultation for identifying the appropriate business structure, getting name approval, creating a personalized LLP Agreement, to all forms, filings, and paperwork—we take care. We also aid in the receipt of your LLP's PAN, TAN, and in opening a bank account. And, we also schedule and pay for reminders and filings to keep things running smoothly regularly. With us taking care of your LLP registration in Delhi, you get a smooth, hassle-free, and completely compliant experience, and you can focus on developing your business.
Planning to register your LLP in Delhi? Contact Legal-N-Tax now at mail@legalntaxindia.com or +91 9810911733 for smooth processing.
