Starting a business is not only about having a good idea but also about choosing the right legal structure. In India, a Limited Liability Partnership (LLP) has become a preferred option for professionals, consultants, startups, and small business owners who want flexibility along with legal protection. LLP offers the benefits of limited liability while keeping compliance simpler compared to a private limited company.
This blog explains the complete step-by-step process of LLP incorporation in India, written in a simple and practical way so that even a first-time entrepreneur can understand it easily.
What Is an LLP?
A Limited Liability Partnership is a business structure governed by the LLP Act, 2008. It has a separate legal identity from its partners, meaning the LLP can own assets, enter into contracts, and sue or be sued in its own name. The liability of partners is limited to their agreed contribution, which protects personal assets from business risks.
Because of fewer compliance requirements and operational flexibility, LLP is widely used for service-based businesses and professional firms.
Step 1: Decide the Partners and Designated Partners
The incorporation process begins with deciding the partners. An LLP must have at least two partners, and at least two of them must be designated partners. Designated partners are responsible for ensuring compliance with the LLP Act and other applicable laws.
At least one designated partner must be a resident of India. Before moving ahead, partners should clearly decide their roles, contribution, and profit-sharing ratio, as these details will later form part of the LLP Agreement.
Step 2: Obtain Digital Signature Certificate (DSC)
Since LLP incorporation is done completely online through the MCA portal, Digital Signature Certificates are mandatory. All designated partners must obtain DSC from a government-authorised certifying agency.
DSC is used to digitally sign incorporation forms and other filings. Without DSC, no document can be submitted on the MCA portal.
Step 3: Director Identification Number (DIN)
Every designated partner must have a Director Identification Number. If a person does not already have DIN, it can be applied for directly through the LLP incorporation form. DIN serves as a unique identification number for individuals managing LLPs or companies.
This step is now integrated with incorporation, which has reduced paperwork and time.
Step 4: Name Reservation for LLP
Choosing a suitable name is a critical step. The proposed name of the LLP must be unique and should not be identical or closely resemble the name of an existing company or LLP. The name should also reflect the nature of business.
Name reservation is done through the RUN-LLP service on the MCA portal. Generally, two names can be proposed at a time. If approved, the name is reserved for a limited period, during which the incorporation must be completed.
Step 5: Filing of LLP Incorporation Form (FiLLiP)
Once the name is approved, the next step is filing Form FiLLiP (Form for Incorporation of Limited Liability Partnership). This is the main incorporation form.
Form FiLLiP contains details such as registered office address, partner and designated partner details, capital contribution, and consent of partners. Required documents like identity proof, address proof, and registered office proof are attached with this form.
Accuracy at this stage is extremely important, as errors may lead to resubmission or rejection.
Step 6: Certificate of Incorporation
After successful verification of the incorporation application, the Registrar issues the Certificate of Incorporation. This certificate confirms that the LLP has been legally formed and mentions the LLP Identification Number (LLPIN).
From this date, the LLP comes into legal existence and is eligible to start its business activities.
Step 7: Drafting and Filing of LLP Agreement
The LLP Agreement is a key document that defines the relationship between partners and the LLP. It includes details about capital contribution, profit-sharing ratio, rights and duties of partners, management structure, and dispute resolution.
The LLP Agreement must be filed in Form 3 within 30 days from the date of incorporation. Delay in filing attracts additional fees. Though not required on the date of incorporation, this document should be drafted carefully to avoid future disputes.
Step 8: PAN, TAN, and Bank Account Opening
After incorporation, the PAN and TAN of the LLP are automatically generated through the MCA system. These details are already mentioned in the Certificate of Incorporation, and no separate online application is required for PAN and TAN.
If needed, the LLP can later apply for physical PAN and TAN cards through authorised portals using the details mentioned in the incorporation certificate.
Once the Certificate of Incorporation is received, a current bank account can be opened in the name of the LLP. Banks usually ask for the Certificate of Incorporation, PAN of the LLP, LLP Agreement (if available), and KYC documents of designated partners.
After opening the bank account, partners must deposit their capital contribution, and all business transactions should be carried out through this account.
Step 9: Other Registrations, If Required
Depending on the nature of business, the LLP may require additional registrations such as GST registration, MSME registration, professional tax registration, or shop and establishment registration. These registrations depend on turnover, location, and business activity.
Why LLP Is a Preferred Business Structure
LLP offers limited liability, operational flexibility, lower compliance burden, and a separate legal identity. It is especially suitable for professionals, consultants, and small businesses that do not require external funding from investors.
Frequently Asked Questions (FAQs)
1. Which form is used for incorporation of an LLP?
LLP incorporation is done through Form FiLLiP. This form is mandatory and includes name approval, partner details, registered office address, and capital contribution.
2. Is Form FiLLiP compulsory?
Yes, without filing Form FiLLiP, an LLP cannot be incorporated.
3. What is Form 9 in LLP?
Form 9 contains the consent and declaration of designated partners stating that they are not disqualified and agree to act as designated partners.
4. Is Form 9 filed separately?
No, Form 9 is filed as part of the incorporation process and is linked with Form FiLLiP.
5. Which form is used to file the LLP Agreement?
The LLP Agreement is filed using Form 3 within 30 days from the date of incorporation.
6. Which forms are used for annual compliance of LLP?
LLPs must file Form 11 as the annual return and Form 8 for Statement of Account and Solvency.
7. What happens if LLP forms are filed late?
Late filing attracts additional fees per day, without any maximum cap. Timely compliance is therefore very important.
8. Is PAN and TAN allotted separately for LLP?
No, PAN and TAN are automatically allotted and mentioned in the Certificate of Incorporation itself.
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