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Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners.
A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner's misconduct or negligence.
The most vital reason for registering as LLP is the limited liability. The members of the firm are only liable for a small amount of debt incurred by it. This is entirely different from proprietorship and partnership where the personal assets of directors and partners are not protected if the business becomes bankrupt.
Private limited company registration process and the LLP registration process are very similar with some differences in the documents and forms filed for incorporation.
Cost: The cost for the incorporation of a private limited company or an LLP is the same.
Features: Both LLP and Private Limited Company offer many of the same features. LLP and Private Limited Company are both separate legal entities and have assets and liabilities that are separate from that of the promoters. LLP and Private Limited Company are both transferable, though a Private Limited Company offers more flexibility when it comes to transferring or sharing of ownership. LLP and Private Limited Company both have perennial life, unless and otherwise closed by the promoters or competent authority.
Fundraising: A private limited company can raise funds from Angel Investors, Private Equity Funds, Venture Capitalists, banks and NBFCs. An LLP can raise funds from Partners, Banks and NBFCs.
LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises.
Transferring the ownership of LLP is also simple. A person can quickly be inducted in as a designated partner and the ownership switches to them.
LLPs having a capital amount less than 25 lakhs and turnover below 40 lakhs per year do not require any formal audits. It makes registering as LLP beneficial for small businesses and startups.
An LLP has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders.
Identify the 2 or more partners and submit their documents as given to the below.
The proposed name is applied and obtained from the Ministry of Corporate Affairs. Upto 2 names can be provided. In case of rejection of both names, an opportunity is provided for re-submission of the form with 2 more names.
Digital signatures must be obtained for the proposed partners of the firm. Digital signature is required for signing of the incorporation application. However, digital signature is not required for obtaining the name approval.
On obtaining the digital signature, the incorporation application can be submitted in the FiLLiP form with the MCA. There is no requirement for obtaining the RUN name approval for submission of this Form.
LLP is incorporated within 4-5 working days. After incorporation of LLP, LLP Agreement in Form 3 has to be filed with RoC within 30 days.
As soon as you get the incorporation certificate, you need to apply for your company PAN & TAN with the NSDL.
We can connect you with few relationship managers to pursue with opening of your newly incorporated company's current account.
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