Showing posts with label Business Type. Show all posts
Showing posts with label Business Type. Show all posts

Monday, August 31, 2020

Limited Liability Partnership (LLP) Registration

Limited Liability Partnership (LLP) Registration

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. Since its introduction in 2010, LLPs have been well received with over one lakh registrations in India. 

LLP is one of the easiest types of business to incorporate and manage in India. With an easy incorporation process and simple compliance formalities, LLPs are preferred by Professionals, Micro and Small businesses that are family-owned or closely-held. Since LLPs are not capable of issuing equity shares, LLP should NOT be chosen for any business that has plans for raising equity funds from Angel Investors, Venture Capitalist or Private Equity Funds. 

Difference between LLP & Partnership

Cost: The cost for registration of LLP is normally higher than the cost for registration of a partnership firm.

Authority: LLPs are registered in India under the Ministry of Corporate Affairs, Central Government. Partnership firms are registered with the Registrar of Firms, controlled by the respective State Government in which the firm is registered. 

Limited Liability Protection: The main advantage of a Limited Liability Partnership over a traditional partnership firm is that in a LLP, one partner is not responsible or liable for another partner's misconduct or negligence. A LLP also provides limited liability protection for the owners from the debts of the LLP. However, unlike private limited company shareholder, the partners of an LLP have the right to manage the business directly. 

Number of Partners: LLPs and Partnership Firms must have a minimum of two partners to be registered. Post incorporation, an LLP can have unlimited partners. In case of a Partnership Firm, if the number of partners at any time reduces below the mandatory minimum of 2 due to death, incapacitation or resignation of a Partner, the partnership firm would stand dissolved. On the other hand, in case of an LLP, if the number of Partners reduces below 2, the sole Partner can still find a new Partner to fill the position without dissolution of the LLP. 

Difference between LLP & Company

Private limited company registration process and the LLP registration process are 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 almost 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. 

Fund-raising: 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. 

Non-Resident Indian (NRI) & Foreign Ownership of LLP

Post changes to FDI regulations on 10th, November 2015, 100% FDI in LLP is permitted under the automatic route. In most sectors, 100% FDI in LLP is allowed through the automatic route, and there are no FDI-linked performance conditions. In addition, LLPs will also be permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route. Therefore, FDI in LLP is now permitted, and NRIs or Foreign Nationals can start or invest in an LLP. 

Documents Required for LLP Incorporation 

The following are the documents required for registration of LLP in India:

 For the Partners

  • PAN Card or Passport for Foreigners.
  • Driver’s license or Aadhaar card, residence card or election identity card or any other identity proof issued by the Government.
  • Less than 1-month old bank statement or telephone bill. 

Registered Office Proof

The authorization from the Landlord (as per Landlord's Name mentioned in the Electricity Bill or Gas Bill or Water Bill or Property Tax Receipt or Sale Deed) to use the premises by the company as its registered office. This is usually referred to as NOC from Landlord; AND 

Proof of evidence of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner or document, which is not older than one month. 

LLP Registration Process

The average time taken to complete an LLP registration is about 15 - 20 working days, subject to government processing time and client document submission. At the start of the engagement, your Engagement Manager will reach out to you for the collection of the necessary information or documents for registration of LLP. The data can be submitted online through WhatsApp or email. 

Once the information is received, it is verified by the Engagement Manager, the process for obtaining Digital Signatures for the Partners of the LLP would be initiated. On submission of the digital signature application, the applicant would have to complete OTP verification and a video KYC check. In parallel to the digital signature application process, we also file a request with the MCA for reserving the name of the LLP - you had selected. 

On obtaining the name approval and the digital signatures, we would draft all the incorporation documents for the registration of the LLP and sent it to the Partners for signature. All the Partners must sign the document and send a scanned copy of the signed document. 

The signed incorporation documents are submitted by us along with the application for the incorporation of LLP to the MCA. The approval from MCA can take anywhere between 3 to 6 working days. Once the approval is obtained, the LLP would be incorporated, and we begin the process of helping you obtain PAN for the LLP and opening of bank account in the name of the LLP. In parallel, we also draft the LLP Partnership Deed. All the partners of the LLP must sign the LLP Partnership Deed on stamp paper, and the signed copy must be uploaded within 15 days of incorporation. The signed LLP partnership deed is then verified and uploaded on the MCA portal within 20 days of incorporation to complete the LLP registration process. 

Post-Incorporation LLP Compliance

After incorporation you need to maintain the basic accounting and compliance for your LLP.

The following are compliance that a LLP must complete each year:

Income Tax Return: LLPs must file income tax return using Form ITR 5. Form ITR 5 can be filed online through the income tax website using the digital signature of the designated partner. 

MCA Annual Return: LLP Form 11 is due on or before 30th of May each year. Form 11 contains details of the number of designated partners, total number of partners, total contribution received by all partners, details of body corporate as partners and summary of partners. 

In addition to LLP Form 11, Form 8 must be filed within 30 days from the end of 6 months of the financial year along with some prescribed fee. Hence, LLP Form 8 would be due on or before 30th October of each financial year. 

In addition to the above, GST registration, GST return filing and TDS return filing would be required for the LLP - based on the sales turnover and various other criteria. 

Contact Mobile 9866512479


Tuesday, August 11, 2020



The perception of doing business varies from person to person, as the choice of a business entity depends on its object, nature and scope. Before deciding on a business structure, several factors are critical viz.   

  • Business activity and its nature and scope
  • Working capital requirement
  • Proprietor’s dependence
  • Concern on taxes to be paid for doing the business

 However, to choose a particular type of business structure, there is no defined formula.

The factor that organizes the process to conduct business in an optimized manner is known as a business organization. It is essentially a structured approach of establishing and maintaining a relationship among men, material, and machinery to carry on the business efficiently for earning profits.

Most of the individuals who manage their business to earn their daily bread are sole-proprietors. The small business entities in India fall under the category of unorganized sector. 

To start and to operate a sole-proprietorship in India, there are no standard legal compliances. However, registration with the local authorities is necessary to secure a license for a business name. 

 At this backdrop, a question arises, who are eligible to start a sole-proprietorship: 

  • Any Indian born citizens with a valid PAN can start and operate a sole-proprietorship
  • No other compliance is required

 Who could be a sole-proprietor? 

  • Indian citizens by birth or by citizenship
  • Persons holding PAN & Aadhaar

Even though a business entity can be established and maintained in different forms, each of the businesses has its own merits and demerits:

Merits of sole-proprietorship: 

  • Very little compliance to adhere
  • Zero interference from Government
  • Minimal wastage of time for approvals
  • Working capital as per business need
  • Single PAN for self and business entity
  • Hassle-free opening of current account
  • Proprietorship registration
  • Single ITR-3 to present the profit or loss with the personal income
  • No need to distribute the profit

Demerits of sole-proprietorship: 

  • No separate legal entity from its proprietorship
  • Losses in business may impact the personal assets of the proprietor
  • Due to a single PAN, transferring the profits to someone to meet future needs is difficult.
  • In case of the death of a proprietor, the proprietorship also ceases. 
  • Difficult to secure investments
  • Difficult to earn and identify

Registration of sole-proprietorship 

Any individual desiring to start a sole-proprietorship has to obtain a business license or a tax license as presented below: 

  • Shops and Establishment license
  • GST Registration
  • Trademark / Brand Name / Logo Registration  (so that no one-else should use your similar / identical name, Logo)
  • MSME Udyam Registration (for availing collateral free Bank loans and government subsidies)
  • FSSAI Registration (for doing business on food and related articles)
  • Import and Export Code (for export-import business)
  • Copyright (for persons engaged in literary & artistic business) 

Documents for sole-proprietorship registration: 

  • Proprietor’s PAN Card & Aadhaar card
  • Proprietor’s name or the business name
  • Mobile number and email address
  • Rental agreement with NOC and a utility bill viz. electricity bill / water bill / property tax receipt / BSNL Telephone bill 

A first-time entrepreneur who wishes to taste the business out of a passion may put in the best efforts, after weighing the options available, to remain independent, rather than working for someone. Unlike a partnership firm or a corporate, sole-proprietorship is an easy way of registering for a business due to minimal government intervention, besides hassle-free conduct of business.  

Contact Mobile & WhatsApp 9866512479 


Sunday, March 18, 2018

Free Legal Knowledge Sharing Series

Free Legal Knowledge Sharing Series

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© Copyright: Respective authors

Disclaimer: The Compilers hold NO Responsibility for any financial loss arises due to the usage of the contents compiled and shared here.

Free Legal Knowledge Sharing Series

These Free Legal Knowledge Sharing Series is for educational purposes only and should not be used for any commercial purpose without the written consent of the Compilers.

© Copyright: Respective authors

Disclaimer: The Compilers hold NO Responsibility for any financial loss arises due to the usage of the contents compiled and shared here.

Compiled by Best Legal Scribe


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