A Limited Liability Partnership (LLP), governed by the Limited Liability Partnership Act, 2008, combines the operational flexibility of a traditional partnership with the protection of limited liability. It is widely used by professional firms, consultants, family businesses and small enterprises that want a formal structure without the heavier compliance of a company.
Features of an LLP
- Separate legal entity distinct from its partners
- Limited liability – a partner is not liable for the misconduct or negligence of another partner
- No minimum capital – partners can contribute cash, property or services
- Lower compliance – audit is required only above specified thresholds
- Flexible management – rights and duties are set by the LLP agreement
- No dividend distribution tax on profits shared among partners
Minimum Requirements
- At least 2 partners, with no maximum limit
- At least 2 designated partners who are individuals, one of whom must be resident in India
- A unique name ending with "LLP"
- A registered office in India
- An LLP agreement setting out profit-sharing, contribution and management
Documents Required
- PAN and address proof of all partners
- Photographs, email IDs and mobile numbers
- Proof of registered office with owner's NOC
- Apostilled documents for foreign partners
Registration Process
- Obtain Digital Signature Certificates for the designated partners
- Reserve the name through RUN-LLP
- File Form FiLLiP for incorporation (DPIN is allotted through the same form)
- Receive the Certificate of Incorporation with LLPIN
- File the LLP agreement in Form 3 within 30 days of incorporation
- Apply for PAN and TAN, if not allotted with incorporation
Annual Compliance
Every LLP must file a Statement of Account and Solvency (Form 8) and an Annual Return (Form 11) with the Registrar, and an income tax return every year. An audit is required if turnover exceeds ₹40 lakh or partners' contribution exceeds ₹25 lakh.
Frequently Asked Questions
Who can be a partner in an LLP?
Any individual or body corporate, including a company or another LLP, can be a partner. Designated partners must be individuals.
Is there a minimum capital for an LLP?
No. An LLP can be formed with any amount of contribution.
Can an existing partnership firm or private company convert into an LLP?
Yes. The LLP Act allows conversion of partnership firms, private companies and unlisted public companies into LLPs, subject to conditions.
Can an LLP raise venture capital?
Investors generally prefer companies, because an LLP cannot issue shares. If you plan to raise equity funding, a Private Limited Company is usually a better fit.