Why register an LLP company? - Benefits

After deciding on your business model, it's important to choose between the Private limited company registration and LLP, by understanding their differences and advantages they provide, so as to choose what’s best for your business model.
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.

Seperate Legal Entity:

• - LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises.
• - It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. A term of dissolution has to be mutually agreed on for the firm to dissolve.

Flexible Agreement:

• - 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.

Suitable For Small Business:

• - 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 can own or acquire property because it is recognized as a juristic person. Partners of LLP cannot claim the property as theirs.

No Owner /Manager Distinction:

• - 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. For this reason, VCs do not invest in the LLP structure.

Check if your firm qualifies for LLP in India

Starting a business requires certain specific requirements to be fulfilled to be eligible for registering as an LLP.
The normal partnership structure and LLP share the same attributes when it comes to internal management, profit distribution and tax liabilities. But, it offers the partners less financial liability (limited liability).

Any business who has:

• - At least two partners are required to form an LLP. There is no limit to the maximum number of partners
• - The nomination of a natural person, if a body corporate is a Partner
• - No shared capital requirement, though each partner must have an agreed contribution towards it
• - Minimum capital contribution: There is no minimum capital requirement for an LLP (or a company, for that matter). The LLP should have an authorized capital of at least Rs. 1 lakh
• - At least one Designated Partner as an Indian resident
• - DPIN for all Partners
• - DSC for all the Designated Partners
• - Address proof for the office of LLP. The registered office of an LLP does not have to be a commercial space. Even a rented home can be the registered office, so long as an NoC is obtained from the landlord
• - With regard to the changes in the FDI regulations dated November 10, 2015, foreign investors are now permitted to have a 100% FDI in the automatic route LLP. The 100% FDI in the LLP is granted to foreign companies who operate in activities or sectors where 100% FDI is considered permissible through the channels of the automatic route. Also, there should not be any performance prerequisites that are linked to FDI. A definite interpretation of the terms such as ‘ internal accruals’ and ‘ownership and control’ has been provided with reference to the LLP. Thus, Foreign investment is made smoother and quicker with FDI in LLP
• - The LLPs will also be permitted to opt for downstream investment in a different company or even choose LLP in those sectors which allow 100% FDI in accordance with the automatic route. This does not come up with any performance constraints that are FDI linked

Documents required for LLP registration in India

The method of LLP registration in India does not require much legwork when it comes to documents.

To Be Submitted By Partners

• - Scanned copy of PAN Card or passport (Foreign Nationals & NRIs)
• - Scanned copy of Adhar Card/ Voter's ID/Passport/Driver's License
• - Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
• - Scanned passport-sized photograph Specimen signature (blank document with signature [partners only])
• - Note: Any one of the partners must self-attest the first three documents. In the case of foreign nationals and NRIs, all the documents must be notarized (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).

For The Registered Office

• - Scanned copy of latest bank statement/telephone or mobile bill/electricity or gas Bill
• - Scanned copy of Notarised Rental Agreement in English
• - Scanned copy of No-objection Certificate from the property owner
• - Scanned copy of Sale Deed/Property Deed in English (in case of owned property)
• - Note: Your registered office need not be a commercial space; it can be your residence, too