LIMITED LIABILITY PARTNERSHIP (LLP) NEW RULES AND PROCEDURE

LIMITED LIABILITY PARTNERSHIP (LLP) NEW RULES AND PROCEDURE

Limited Liability Partnership (LLP) is a new form of corporate entity; it is a partnership in which partners have limited liabilities. LLP is regulated under Limited Liability Partnership Act, 2008 and registered with Central Government under the Ministry of Corporate Affairs (MCA).

As on 26th January 2018, the application for allotment of Designated Partner Identification Number has been closed due to making amendments in the forms of LLP. But as on 2nd October 2018, the government came up with the new forms and changes in the incorporation procedure of LLP.

  • Before 2nd October 2018 we need to file a separate form i.e. FORM-1 for name reservation in which we can apply six names in one application but now we can apply only two names in one application which is now converted into web-services i.e. RUN-LLP.
  • Earlier after name approval but before incorporation the partners need to take DPIN/DIN but now there is no such provision is applicable. Now those persons can also apply for the LLP registration without having DIN/DPIN because the partners can apply for their DPIN/DIN in the same incorporation form which is now get changed into FiLLiP from FORM-2.
  • Now there is only there step to incorporate an LLP:
  1. Name reservation
  2. Taking DSC (Digital Signature Certificate)
  3. DPIN/DIN and Incorporation of LLP
  • There is not only changes in the incorporation form and process but also get some changes into another form and these are:
  • Addendum to FORM 2 which is for the details given in respect of designated partner and partners of LLP which is not provided in the corresponding form FiLLiP which is now get replaced by the form Addendum FiLLiP. The SRN of Form 1 is substituted with the RUN-LLP SRN.
  • FORM 5 remains the same form only after making a few amendments in it. The SRN of FORM 1 is also allowed to pre-fill in the FORM if it is approved by the MCA before this notification but the FORM 5 still not filed and if the form is filed it will remark as re-submission and the applicant need to file the new forms.
  • FORM 17 is application and statement for conversion of a firm into LLP is also remains the same by making a minor modification in the form.
  • FORM 18 is the application and statement for conversion of a private company/ unlisted public company into LLP, this form also remains the same only a few amendments are made in the form.

 NEW RULES FOR FILING LLP FORMS ARE:

  • Maximum two DINs/DPINs is allocated through FiLLiP
  • In case none of the Designated Partners has DIN/DPIN, the form can now be signed by providing PAN details of the Designated Partners.
  • If the name is not applied and approved through RUN-LLP, the user can apply the name through FiLLiP but the only name is allowed to apply in form FiLLiP.
  • DPIN/DIN/DSC is now no more required for the name reservation.
  • The same user login id which was used for reservation of name through RUN-LLP has to be used for submitting and uploading FiLLiP.

It is advisable to get familiar with the Limited Liability Partnership Rules 2009 along with the amendments made for the incorporation of LLP before applying for the LLP registration so it is always better to take professional assistance for the registration of an LLP.

Top LLP startups in India

The LLP format is certainly proving to be beneficial to start ups and so more and more people are using it as a jumping board to get their businesses off the ground. Here’s a list of some of some startups who managed to fly high with that LLP edge:

  1. KNOWLEDGE MEDIA VENTURZ LLP: Dedicated to working with the medical fraternity, this venture acts a platform to enable sharing of information between experts. The medical division for communication of KVM is ‘Awesome‘. This initiative actually specializes in conceptualization, development and delivery of high-end CME initiatives in digital, online, print and below the line formats. Over the last 3 years, they have emerged as a leading player regarding the delivery of high-end CME programs to Indian doctors while also having partnerships with major International Medical Associations.
  2. CHOCKRITI CHOCOLATES LLP: Chokriti is a chocolate company which uses only the finest international raw materials to make its end products. They are also vouched for by Ecole Chocolat with the chocolates qualifying for International Chocolate Awards (twice) and which were also featured at the Amsterdam Chocoa Festival of 2015. Their profile also States that the products are FSSAI and US FDA compliant with calorie counts per piece/bar. The authenticity shows up in the fact that they prefer to naturally extract different flavours from respective flowers or fruits instead of creating artificial ones.
  3. SIMPLICITY COMMUNICATIONS LLP: It is an advertising and branding company which believes in the mantras of simplicity and that of the formula- less is more. They have put forth designs for Snowcem paints, Singhad Institutes, SIM, Grover Zampa, Techtonic, K Education, 4 Degree and more.
  4. HEMANT SHAH AND ASSOCIATES LLP: It is a firm which offers chartered accountant services and aligns itself with professionalism, efficiency and Excellency. They also offer investment consultancy, evaluation of projects and services related to all types of business and corporate agreements. Additionally, they also specialize in providing end to end support for startups- proprietorship, partnership, LLPs and more. They have offices in 5 cities in India and serve clients across the world.
  5. ACCENTUATURE EDUTAINMENT LLP: It is a tutorial centre which offers various education services like providing tutorials for IELTS entrances, language classes for English conversation, teacher training, personality development, soft skill training, Motivation training, interview preparation, accent training, Voice training, body language training and much more. They are preferred and liked by their customers and clients.
  6. PENCIL POINT DESIGN LLP: They are a branding and designing consultancy with the focus on creating a lasting impact on their designs. They believe in the having deep and meaningful resonances in their clients and customers through their products. They have designed for Tec spa, Bioved, Hompath, Paninaro, AEHI (Advanced Eye Hospital and institution), UR Solar Solutions and lots more.

All the above-listed firms started as LLPs which were registered in the 2013 index. All of them are active as of now and have made significant progress in the span of nearly half a decade. So if anyone had any doubts regarding the sustainability of LLPs, this list will hopefully cause them to reconsider.

Which type of company registration to go for a new startup: Private Limited or LLP?

So you are finally on the track for opening a business of your own. Everything is set- you have made deals with suppliers and distributors; got the papers done and even got a small office of your own. But you realize that perhaps doing it alone is going to be a huge risk, so you invite some friends to become partners in your business. While it all seems good in theory, but it’s important to consider what type of registration your business will go under in such a case? Will you choose an LLP (Limited Liability Partnership) or will you choose a Private Limited firm? We are here to discuss and compare both these formats pros and cons below:

  1. The objective of the business: While starting a business, everyone starts with dreams. So, the team needs to ask itself, where does it see the startup five years or a decade down the line- do they see it expanding to include more stakeholders and investors? Or do they want it to cater to just a specific niche in a specific area? Those businesses which aim to expand- the company format is much more suitable since it allows for the seamless infusion of many investors and people. They feel confident while investing in a company since there are numerous laws protecting their investments. But if the aim is to be regulated in terms of produce and area, then the LLP system is most recommended.
  2. Incorporating cost: This is certainly going to be a big factor while deciding which format to go for and LLP’s get the edge in this case since their incorporating cost is less, whereas for a company it is RS 8,000. It should also be noted that LLPs don’t have to comply under laws which order a company to file registration papers immediately with a relevant document stating all the details of the partners nor is it liable to hold designated meetings at periodic intervals.
  3. Taxes: Here, both the formats are taxed at a flat rate of 30% including SHEC and EC. But, LLPs do not have to pay surcharge whereas companies liable to the same at the rate of 5% if their net income exceeds Rs 1 crore for the financial year. As an added bonus for LLP, they are liable for the Alternative Minimum Tax at 18.5% on the total adjusted income. Companies are required to pay advance tax for four quarterly instalments but LLPs are liable to only pay only in three instalments.

Thus, while the picture seems to be overwhelmingly in the favour of LLPs, but it should be remembered that this form of business is most favorable for startups on a small scale otherwise as the business expands the LLP format will give rise to cumbersome problems. So it advisable to think we’ll before applying.

You can also read: Is Pvt ltd good option for startups?

Private limited company registration online

Assimilate the workforce with less liability and churn out success

Indian economy is flourishing. You want to become part of it. You want to pour your input in a little way. You are thinking of a business but the capital is pulling you back. The ideas are getting into the hole. You are applying for a loan but the approval has no time limit. So, the business got stuck in between. You are your own storyteller. The obstacles cannot pull you back. Start a business with LLP method. Apply the procedure and get permission for doing business on LLP registration. Your liability will be divided between partners and you can get your benefits as share. You are able to do business with less risk and more gain.

  • In India, you are applying for LLP registration. The LLP registration has come into the act on 2008. It acts by the Government of India. You are protected from personal liability, on the basis of their capital contribution. You are able to register your interest and get permission. The method of LLP registration will be like

PROCEDURE TO REGISTER A LLP (EFFECTIVE AS ON 2ND OCT, 2018)

  1. Check the availability of the name of the LLP after checking the availability of the name file the application for the name approval with RUN-LLP(Reserve Unique Name-Limited Liability Partnership) replacing the FORM-1. This is new changes made by the MCA effective as on 2nd October 2018. For now, we can apply only two names to one RUN-LLP application.
  2. The second step is to obtain DPIN/DIN and after obtaining the identification number the partners can incorporate the LLP but for this, you need to file different forms but now all the procedure get to sum up into one form FiLLiP(Form for Incorporation of LLP) replacing the Form-2. Now in this one form, three steps can be taken into one, i.e;
  3. Name Reservation
  4. Allotment of Designated Partner Identification Number (DPIN/DIN)
  5. Incorporation of LLP
  6. You will need the digital signature from all-inclusive partners.
  7. You are permitted to collect the certificate of incorporation from the registrar of companies.
  8. Now you have to open a bank account after filing the LLP agreement

 

  • Now if you are scratching your head and getting lots of unwanted suggestions from the people or from your business partners, then it is time for you to make them understand the reasons behind your chosen LLP.

    Benefits of LLP Registration will be like

  • The numbers of LLPs have no limits. You can ask or gather as many members as possible so the risk factors went down
  • The LLP management is elastic in nature. You can easily maintain the internal method of LLP. Organizing the internal management of the company is quite tough.
  • You are free to collect and assimilate the funds from various places. The amount or the will of the partners have no rigidity. You can utilize the funds intelligently at any time during the business run. The main thing you have to take care of is the LLP act of 2008
  • To run the company you have to pay the Dividend Distribution Tax. LLP is not associated with this DDT.
  • The chain of work or management likes to apply the LLP in their workforce. There are many professionals who generally works with many layers of working professionals.LLP helps them to unite and divide the work pressure while the liability will be the same but less. The Doctors, engineers, CA, CS, Advocates, engineers are eager to register as LLP Company Registration.

The virtual business houses are more prone to get LLP from Ministry of Corporate registration. They are in different places and operating the business.LLP will solve the problem, but the business acumen in you will be verified.

You are willing to start a business. The capital, time, liabilities and the ideas are flowing in the market. The tapping method will take you to the satisfying position. The business houses are cutting down the workforce for one particular work and trying to recruit as many multi-tasker as possible for the large perspective of business. You are your own management if LLP is there to handle the internal matters.LLP is online CA for your company.