7 Most Frequently Asked Questions (FAQs) & Answers about LLP Registration in India?
Limited Liability Partnership (LLP) has gained popularity among entrepreneurs in India as a flexible business structure that combines partnership benefits with limited liability protection. This article addresses frequently asked questions about LLP registration, providing clear answers to demystify the process. It aims to assist aspiring entrepreneurs and business owners in understanding the intricacies of LLP registration in India.
Qus.1. What is a Limited Liability Partnership (LLP) and how is it different from other business structures?
Ans. A Limited Liability Partnership (LLP) is a flexible business structure in India that combines the advantages of a partnership and limited liability protection. In an LLP, partners have limited liability, which means their personal assets are safeguarded in case of business debts or legal issues. This business structure provides partners with the freedom to operate the business as per their mutual agreement without the burden of excessive legal formalities. LLPs have gained popularity due to their simplicity, cost-effectiveness, and the ability to balance personal control and liability protection.
Qus. 2. What are the eligibility criteria for LLP registration in India?
Ans. To be eligible for LLP registration in India, certain criteria must be met. These include having a minimum of 2 partners, with at least 2 designated partners, and one of them being a resident of India. Partners can be individuals or corporate entities, with no restrictions based on nationality or residency. The LLP must have a registered office address in India, which can be a commercial or residential address. Additionally, there is no minimum capital requirement, and partners can contribute capital as agreed upon in the LLP agreement.
Qus. 3. What documents are required for LLP registration, and how can I prepare them?
Ans. To register an LLP in India, the following documents are required:
1. DPIN & DSCs must be obtained for all designated partners
2. A copy of the address proof for the registered office of the LLP, such as electricity bill, telephone bill, or rental agreement, must be provided.
3. Each designated partner must submit a copy of their PAN card, passport, or Aadhaar card as identity proof.
4. The LLP agreement, defining the rights, duties, and responsibilities of partners, needs to be drafted and notarized. However, it has to be submitted within 30 days after the registration of the LLP.
To prepare these documents, collect information, such as addresses, identity proofs, and partnership details. Consult professionals or legal experts to ensure accuracy of documents.
Qus. 4. What is the process and timeline for LLP registration, from application submission to receiving the Certificate of Incorporation?
Ans. To register an LLP in India, follow these steps: obtain DPIN and DSC for designated partners, reserve a unique name, file incorporation documents and apply for LLP registration online, pay registration fees, receive the Certificate of Incorporation from the RoC, and file the LLP Agreement within 30 days. The timeline for LLP registration can vary based on the complexity of the application, response time from authorities, and completeness of the documentation, but it usually takes around 15 to 20 working days from the date of submission of the application.
Qus. 5. Are foreign nationals or Non-Resident Indians (NRIs) allowed to be partners in an LLP registered in India?
Ans. Yes, NRIs and foreign nationals can become partners in an LLP, subject to the provisions of the FEMA.
Qus. 6. What are the compliance obligations for an LLP after registration, such as annual filings, maintenance of books of accounts, and audit requirements?
Ans. LLPs in India have specific compliance obligations after registration. These include filing an Annual Return (Form 11) with the RoC within 60 days of the financial year close and submitting the Statement of Account & Solvency (Form 8) within 30 days after six months of the financial year. LLPs must maintain proper books of accounts, recording financial transactions, assets, liabilities, income, and expenses at the registered office. If the LLP’s annual turnover exceeds the specified threshold or its contribution surpasses Rs. 25 lakhs, a mandatory audit by a qualified Chartered Accountant is required.
Qus. 7. What are the tax implications for an LLP and its partners, including the applicability of Goods and Services Tax (GST) and income tax?
Ans. LLPs are subject to income tax on their profits at the applicable slab rates. Partners, on the other hand, are not taxed individually on their share of LLP profits. However, partners are liable to pay income tax on any salary, interest, or remuneration received from the LLP. In terms of GST, LLPs are treated as separate taxable entities, and they need to register and pay GST if their annual turnover exceeds the prescribed threshold.
Final Thoughts
LLP registration in India presents entrepreneurs with a unique opportunity to establish a business structure that blends the advantages of a partnership with limited liability protection. By exploring the frequently asked questions surrounding LLP registration, this article has aimed to shed light on the intricacies of the process. Armed with this valuable information, aspiring business owners can confidently embark on their entrepreneurial journey, leveraging the flexibility and benefits offered by LLPs to propel their ventures towards success.
