Limited Liability Partnership (LLP)

What is Limited Liability Partnership?

Limited Liability Partnership is a special type of Partnership firm that has limited liability. Limited liability Partnership offers the benefit of limited liability to its owners and at the same time needs minimal maintenance. LLP is favoured by Professionals, Micro and Small businesses that are family-owned or closely-held. An LLP also gives limited liability protection for the owners from the debts of the LLP. Accordingly, all partners in an LLP enjoy a kind of limited liability protection for every individual’s protection within the partnership, related to that of the shareholders of a private limited company.

Minimum Requirements of LLP Registration

1. Minimum 2 Person: Limited Liability Partnership (LLP) can be registered by at least two persons, who shall act as the designated partners of the LLP. There is no cap on the maximum number of partners in an LLP form of business.
2. No Minimum Capital: Limited Liability Partnership (LLP) can be incorporated with any amount of capital as per your business requirements, there is no maximum limit on the capital which can be invested in the LLP. However, the minimum capital cannot be less than Rs. 10,000/-
3. Resident Director: Any One of the Designated Partner of the LLP must be Resident in India. A person is said to be resident if he or she stays in India for at least 182 days during the preceding financial year irrespective of their citizenship.

Advantages of Limited Liability Partnership

1. It has a separate legal entity.
2. The liability and responsibility of every partner are limited to the contribution made by the partner.
3. LLP has Perpetual succession.
4. The cost of forming an LLP is low as compared to any other Form of Business.
5. Less agreement and regulations in the formation of LLP.
6. No terms for minimum capital contribution.
7. The ownership of an LLP can be easily shifted to another person.

Royain Consultancy India Pvt. Ltd. Liability Partnership

The Services which are included in our package are as Follows:
✅ Digital Signatures
✅ DPIN Of Two Directors
✅Name Search and Approval
✅Filing of Form Fillip along with Pan and Tan
✅LLP Agreement
✅Provisional PF ESI Registration
✅GST Registration
✅MSME Registration

Documents Required for Forming Limited Liability Partnership

1. Copy of PAN Card of partners
2. Passport size photograph of partners
3. Copy of Aadhaar Card/ Voter identity card/ Driver’s license of Partners
4. Current Bank Statement/ any Utility Bill of Partners
5. Current Electric Bill for Registered Office of Company
6. Passport Size Photograph of all Partners
7. Rent Agreement if Applicable

Process of Limited Liability Partnership

Step -1 Arrange all Required Documents: The first step is to arrange all the documents and send the same over the email / WhatsApp to us. Once all the Documents are Received, we will Start the Further Process.
Step -2 DSC and Name Availability: The Next Step is to Start the Further Process of Digital Signature and Checking the Name availability.
Step-3: Preparation of Documents: The Next Step is Preparation of Documents to be Submitted at Department.
Step-4: Filing of Fillip Form: The Next Step is Submission of Fillip Form at Department.
Step-5: Drafting and Filing of LLP Agreement: The Next step is drafting and filing of LLP Agreement at ROC.
Step-6: Apply for Pan and Tan: The Next Step is to apply for Pan and Tan.

Important Forms in Limited Liability Partnership

RUN- LLP Reserve Unique Name-Limited Liability Partnership- A form for reserving a name for the LLP
FiLLiP- A Form for incorporation of LLP
Form 5- Notice for change of name
Form 17- Application and statement for the conversion of a firm into LLP
Form 18- Application and Statement for conversion of a private company or unlisted public company into LLP.

Mandatory Compliance After LLP Incorporation

1. Statement of Account & Solvency
2. LLP Annual Return
3. Income Tax Return

FAQ on Limited Liability Partnership

1. Is there any minimum capital requirement to register a LLP in India?
No, there is no minimum capital requirement for Limited Lability Partnership. Any person can incorporate a LLP of capital of his choice. If you have capital crunch, then LLP registration is the best option for you.

2. What do you mean by designated partners? And who can become a partner in LLP?
Designated Partners are the partners who are responsible for the whole conduct of the LLP. Designated partners are like directors in the company. They are appointed since incorporation to take care of the LLP functioning. Each designated partner is allotted a DPIN which is another name for DIN.Any person including the body corporate can become the designated partner.

3. Is audit of LLP is mandatory as per the LLP act?
No, the audit of LLP is not mandatory from zero turnovers. However, it becomes mandatory if the total contribution by partners is more than 25 lakh or the total turnover is more than 40 lakhs.

4. Can an existing partnership firm be converted to LLP?
Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.

5. If any partner wants to leave from LLP. How he can do so?
As per the clause mentioning in LLP agreement, a person may leave the organization. Supplement deed is required to be formed at the time of any changes in constitution of LLP. Whenever any person ceases to be partner or any changes occurred then have to inform the ROC by filing prescribed forms.

6. How can a person become partner of an LLP?
The person who subscribes the subscriber sheet at the time of formation of LLP will be considered as partners in LLP. After incorporation, new person can be added as partner as per the clause mentioned in LLP agreement.

Annual Compliance of LLP

Running a business with all necessary compliances is equally important as registering a business, whether in the form of Company or LLP. To bring more transparency, every LLPs registered with the Ministry of Corporate Affairs are required to follow all the necessary compliances. The LLP compliances depend on business activity. However, it is the responsibility of the partners of an LLP to make sure that all the necessary compliances are duly complied with.

Limited liability partnerships (LLPs) are required to meet fewer criteria for compliance on filing annual returns, in comparison to private limited companies. LLPs are required to provide information related to the statement of accounts, and returns, on an annual basis. Penalties, however, are huge for failure to comply. Entities that don't provide the requisite information are fined heavily, with penalties that can go up to Rs. 5 lakhs.

Royain Consultancy India Pvt. Ltd Compliance Package

The Services which are included in our package are as Follows:
✅ Preparation of Financial Statements
✅ Annual Report
✅Partner’s KYC
✅ Income Tax Return of LLP
✅ Filing of Form LLP 8
✅ Filing of Form LLP 11

Documents Required for LLP Compliances

1. Certificate of LLP
2. LLP Agreement
3. Digital Signatures of Partners
4. Bank Statement of Company

LLP Compliances Procedure

Step -1 Arrange all Required Documents: The first step is to arrange all the documents and send the same over the email / WhatsApp to us. Once all the Documents are Received, we will Start the Further Process.
Step-2: Preparation of Documents: The Next Step is Preparation of Documents to be Submitted at Department.
Step-3: Finalization of Balance Sheet and ITR: The Next Step is Finalization of Balance Sheet and ITR to be submitted.
Step-4: Preparation of Notices and Board Minutes: The Next Step is Preparation of Notices and Board Minutes.
Step-5: Submission of Forms: The Next Step is Filing of Forms i.e ADT-1. AOC-4. MGT-7 to ROC.

What Are the Benefits of Filing Annual Compliances for LLPs?

1. Higher Credibility: Annual compliance provides for higher credibility to the organization for loan approvals or any other similar requirements.

2. Record of Financial Worth: Annual compliance filings by LLP’s provide records to other companies regarding their financial worth, which may result in new and interested investors.

3. Stays Active and No Penalties: With regular filings, LLPs are not declared as defunct, and stays active. Also, annual compliance filings are mandatory and hence involve penalties (additional fees) to LLPs, when they default on filings.

4. Conversion or Closure: Regular annual compliance filings facilitate easier conversion of Limited Liability Partnerships into other types of companies, as well as quicker resolutions in case of dissolution of partnerships.

What are the Checklist items for Filing of Annual Compliance?

Annual returns need to be filed with the Registrar of Companies.

Annual returns to be filed as per the prescribed format of LLP Form 11.

This is required to be filed within 60 days from the close of the financial year, or the 30th of May of each year.

The LLP annual compliance has to be met by each and every registered LLP even if there is no business activity. In fact, it has to be met even if the LLP has been closed down and whether or not a business bank account exists.

What are the Documents Required Filing of Annual Compliance?

Form 8
You must file the Form 8 inside 30 days from the completion of 6 months after a financial year ends. Two designated partners can sign this form digitally. Also, a company secretary/chartered accountant/cost accountant must certify the same. There are 2 parts in a Form 8 -
Part A - The solvency statement.
Part B - Statement of expenditure & income, statement of accounts.
For not filing the Form 8 on time, a penalty of Rs 100 per day will be imposed.

Form 11
This form contains details such as the total number of designated partners, details of partners along with details of body corporates as partners, contributions received by the partners and summary of all partners. All LLPs must file the Form 11 within 60 days after the end of the financial year, along with the fee prescribed. Therefore, the LLPs should file their Form 11 by 30th May every year.
An LLP will not be allowed to close or wind up till it files all its annual returns. Therefore, all LLPs must file their annual returns on time, to avoid penalties.

GST Amendment – Changes to PAN

Q1. What is Annual Return?
Annual return is a mandatory filing to be made by all LLPs in India. The Annual return along with the required documents must be filed with the Ministry of Corporate Affairs.

Q2. What is the Statement of Accounts and Solvency?
The Statement of Accounts and Solvency is a mandatory filing that is required for all LLPs in India. The Statement of Accounts and Solvency contains a declaration on the state of solvency of the LLP by the designated partners and also information related to the statement of assets and liabilities and statement of income and expenditure of the LLP.

Q3. What is the Due Date of Filing of LLP Return?
The Annual return of an LLP is due within 60 days of close of financial year. Annual return of an LLP is due on or before May 30th of each financial year.

Q4. What is the Penalty for Not Filing LLP Annual Return?
Late filing or non-filing of LLP Annual Return or Statement of Accounts and Solvency before the due date will attract a penalty of Rs.100 for each day of default.