Formation of LLP

• Shareholders: To register an LLP, there should be a minimum of two partners. The first partner should execute the incorporation documents for registering the LLP and the First LLP agreement.
• Designated Partners: : An LLP should have a minimum of two ‘Designated’ partners who are individuals and at least one of them should be a resident of India. Only individuals can be designated as partners in an LLP. Where a corporate body is one of the LLP partners, it should nominate an individual as a Designated Partner.Entities permitted to operate as partners in an LLP include:1. Companies incorporated in and outside India;
  2. LLPs incorporated in and outside India; and
  3. Individuals residing in and outside India.

  An individual partner, who is an Indian National, should have a Permanent Account Number (PAN) allotted by the Income Tax Department.

• Director Identification Number (DIN): An individual should hold a valid DIN to become a Designated Partner of an LLP. A DIN can be obtained by filing an online application supported by valid identity (PAN card) and address proof documents, validated by professionals.
• Electronic Filing and Digital Signature Certificate: All filings including DIN applications are made through the MCA online application system, appended with a valid Digital Signature Certificate (DSC). One of the Designated Partner should have a valid digital signature to submit online applications for LLP Registration.

• Submission of documents:Once you decide on an incorporation product, our skilled and professional incorporation team will guide you through the entire process.
  The first step is to obtain a DIN for each proposed designated partner.

  This involves filing a completed DIN application online along with supporting documents: for Indian nationals, self- attested copies PAN card and any valid address proof; and for foreign nationals notarized copies of passport and valid address proofs are required.

• Verification of information and filings: OOnce the agreed information and documents are submitted, our Process Team verifies and authenticates all submissions before filing them for approvals with the relevant authorities. Quality is given utmost importance.
• Obtain DIN number and file company name: Once DINs are allotted, an application for registering the preferred LLP Name is submitted.
• Execution of incorporation documents: The primary documentation required for LLP incorporation includes:
  Subscribing an incorporation document agreeing to all terms and conditions as required under the LLP Act for filing with the Registrar of Companies.

  A Proof of Address and No Objection Certificate (NOC) pertaining to the proposed Registered Office address;

  Completed application forms and prescribed supporting documentation for LLP registration.

• Issue of Certificate of Incorporation: As soon as all the information and documents are submitted by our Process team, the Registrar’s office will register the same and issue a Certificate of Incorporation (COI). The COI is issued digitally under the digital signature of the Registrar of Companies.
• Execution of LLP Agreement: The newly-registered LLP is required to plan and execute an LLP Agreement. Our legal team will help you in drafting and executing an appropriate agreement and the Process Team will verify and submit a copy of the executed LLP agreement to the Registrar in the prescribed format within 30 days of registering the LLP.
• Letter of Consent: The ultimate step in the LLP incorporation process is the preparation and submission of Letters of Consent from each Partner or Designated Partner. Our Process Team will verify and submit these consent letters to the Registrar in prescribed format within 30 days of registering the LLP.

LLP agreement and partners have the freedom to regulate affairs of the LLP.

LLP is the right organizational structure for doing business as it gives freedom of management and flexibility of ownership. The main benefits of an LLP are:

• Efficient tax-saving business form In the eyes of tax laws, LLP is a ‘Firm’ and hence firm taxation is applicable to an LLP. Various taxes levied on a company, like minimum alternative tax, dividend distribution tax and surcharges, are not applicable to an LLP. The profit after tax from an LLP’s operation will be reflected in the personal income of its partners. It is estimated that the approximate tax savings of an LLP will be about 17% compared to that of a company.
• Management In companies, the management is vested with its Board of Directors. They are responsible for taking day-to-day decisions and management of a company. Shareholders have limited powers in the management of a company. However, in an LLP, management is vested with the partners unless specifically mentioned in the LLP agreement. It is possible for an LLP to delegate all powers of management to a single person except compliance requirements under the LLP Act, which are the responsibilities of the Designated Partners.
• Less compliance requirements Compared to a company, the legal compliance requirements are lesser for an LLP. For a company, it is mandatory to maintain various registers, minutes, etc., but there is no such requirement for an LLP.
• Audit of accounts All companies are required to assign a Chartered Accountant as auditors for auditing accounts, irrespective of the size and operation of the company. In case of an LLP, the audit requirement starts only if the turnover exceeds Rs.40 lakh or contribution exceeds Rs.25 lakh.
• Less cost of maintenance Statutory filing fees payable by an LLP is lesser compared to a company. Hence, even small businesses can think about incorporating their firms as the running costs are very low.
• Flexible ownership It is possible for a partner in an LLP to resign, subject to the terms of the LLP agreement. After resignation, usually the partner can take back his share of contribution from the LLP.
• Management flexibility An LLP is free to take any business decisions subject to the LLP agreement. It can enter into a contract with its partner or relatives of partners and borrow and give loans to outsiders. However, in a company structure, many of these decisions need either the permission of the shareholders or approval of government authorities, for which the process is cumbersome.
• No ownership restrictions In a private company, the number of shareholders is limited to 50. There is no such restriction in an LLP. An LLP can have any number of partners and thus can secure more capital for its business operations.
• Greater credibility By virtue of being a registered entity under government laws, registering your business as an LLP will ensure better legitimacy and greater credibility while dealing with other companies, banks and potential business partners.