Parameters best suited for carrying on any business in current times

Selection of form of entity for carrying on business is dependent on various factors and each factor has its own plus and minus. Each one has to decide depending in his own requirement and risk appetite. Stated below are a few parameters to help decide which structure suits business best.

PARTICULARS LLP PARTNERSHIP COMPANY
Separate Legal Entity Yes No Yes
Perpetual Successions Yes No Yes
Composition of Ownership Minimum Partners : 2
Maximum Partner : No limit
Minimum Partners : 2
Maximum Partners : 10 in case of Banking business -20 for other business
Minimum members: -2 in Private Company -7 in Public Company
Maximum Members: -200 in Private Company -No limit in Public Company
Comparisons of Directors/Designated Partners Minimum number of DP’s : 2 No concept of DP Minimum Directors : -2 in Private Company -3 Public Company
Name Name must end with LLP or Limited Liability Partnership No statutory requirement. Can mention word “registered” after name (in certain states-including Maharashtra) Name must end with Private Limited or Limited Except where exemption granted to a Company having Charitable objects (now Sec 8)
Agency Relationship Partners are agents of LLP but not of each other Partners are agents of firm of each other Within the meaning under the Indian Contractors Act, 1872 directors can be considered as agents of the company but not of other directors or members
Ownership of Assets LLP can own the assets Not being a separate legal entity, certain assets can be legally held only in the name of partners. Company can own the assets
Filing of Annual Returns Yes No Yes
Audit of Account To be audited only if Turnover exceeds Rs 40 Lakhs or Contribution Rs 25 Lakhs in any Financial Year No specific provision under Partnership Act Account of all companies must be audited as per Companies Act, 2013
Voting Rights Each partner shall have voting rights in proportion to capital contribution or as specified otherwise in LLP Agreement Each partner shall have voting right in proportion to capital contribution otherwise in Partnership Deed For Board of Directors Meeting : - Each Director has 1 vote
In General Meeting : Ordinary shareholder can vote in proportion of shares held.
Company can also issue shares with differential voting right
Dissolution Voluntary or by the Tribunal By Agreement, mutual consent, insolvency, certain contingencies and by Operation of Law Voluntary or by order of National Company Law Tribunal
Governing Statute and Agency Statute - The LLP Act,2008
Agency – Registrar of Companies
Statute – The Indian Partnership Act, 1932
Agency – Registrar of Firms
Statute – The Companies Act, 1956(to the extent not repealed and The Companies Act, 2013 (to the extent notified)
Agency - Registrar of Companies
Conversion LLP cannot be converted to a firm but only into company Can be converted to a LLP and company Private Limited and Unlisted Public Company Can be Converted to LLP
Creation Created by Law Created by Contract Created by Law
Registration Compulsory Registration though advisable is optional Compulsory
Charter Document LLP Agreement Partnership Deed Memorandum and Articles of Association
Related Party Transactions No Restriction No Restriction Can be carried out with prior approval of members and other statutory approvals

Pre-requisite for Incorporation of LLP

Director Identification Number (DIN)/ DPIN and Digital Signature Certificate (DSC) for Designated partners

Name for Proposed LLP – Maximum six names can be given in order of preference

Significance/reasoning for eachname proposed for LLP

Main Object/Business proposed to be carried by LLP

Partners of LLP with their Contribution and Profit sharing Ratios

Designated partners out of partners

Registered office address of LLP with document evidence

Understanding between Partners and other terms for Partnership for drafting LLP Agreement

Documents Required

Self attested copies of PAN Card of all the partners

Self attested copies of Aadhaar Card of all the partners

Self attested Passport/ Voter Identify Card / Driving License. (Identity Proof for DIN)

Self attested Bank statement/ Electricity Bill/ Telephone Bill/Mobile Bill (Address Proof for DIN)

Passport size photographs of all the partners

Mobile No. and E-Mail id of all the partners

Description of activities to be conducted by LLP

In case of rented premises- Rent Agreement + Electricity Bill + NOC

Copy of Utility Bill Eg- Landline Bill or Electricity Bill where the registered office of the company is to be situated (Shall not ne older than 2 Months)

Max 6 Proposed Names and their significance with theactivities and objects to be conducted by the Company

Other Information Required

Educational qualification and Occupation of partners

Place of birth of director partners

Proposed capital contribution along with division of capital among the partners

Process of Incorporation

Step 1.

Preparation of digital signatures

Step 2.

Obtaining DIN/ DPIN

Step 3.

Name Application through RUN

Step 4.

Preparation of LLP Agreement

Step 5.

Filing of Incorporation Documents with registrar

Step 6.

Applying for PAN

Pricing

Normal

Starting at Rs.7,999/- Onwards
  • 2 Class 2 DSC
  • 2 Designated Partner Identification No.
  • 1 Lakh Capital
  • LLP Deed
  • PAN Fees
  • Certificate of Incorporation

Standard

Starting at Rs.16,999/- Onwards
  • 2 Class 2 DSC
  • 2 Designated Partner Identification No.
  • 1 Lakh Capital
  • LLP Deed
  • PAN
  • GST Registration
  • Certificate of Incorporation
  • Annual Accounting and Bookkeeping
  • Annual ITR Filing
  • Annual ROC Filing

Executive

Starting at Rs.21,999/- Onwards
  • 2 Class 2 DSC
  • 2 Designated Partner Identification No.
  • 1 Lakh Capital
  • LLP Deed
  • PAN & TAN Fees
  • GST Registration
  • Certificate of Incorporation
  • Annual Accounting and Bookkeeping
  • Annual ITR Filing
  • Annual ROC Filing
  • GSTR 3B and GSTR-1 Filing
Note: Charges may vary as per points mentioned Below
  • In case RUN_Name Approval is rejected, then charges will increase in proportion to No. of RUN Forms Filed.

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Frequently Asked Questions

Can I register an LLP at my residence?

Yes, you can register an LLP at your residence. You only need to submit any utility bill along with the No Objection Certificate (NOC).

Can I be a Partner if I am already employed?

Yes, one can be a partner in an LLP, Director of a Private Limited Company or OPC even if he is already employed. There are no such restrictions. However, you must ensure that your employment agreement does not contain any restrictions for you to become a Director of any company or a Partner in an LLP.

Is FDI allowed in an LLP?

Yes, FDI or Foreign Direct Investment is allowed.

Can an NRI/Foreign National become a partner in LLP?

Yes, an NRI or Foreign National can be a partner in the LLP. The only requirement is that at least one Designated Partner should be a resident of India.

How long is the incorporation of LLP valid for?

Once a Limited Liability Partnership is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the LLP will become a Dormant and maybe struck off from the register after a period of time.