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PARTNERSHIP INTO LLP

Limited Liability Partnership

LLP is a limited liabilities partnership firm, which is form and acts as a body corporate further but in the taxation aspect, it is similar to a general partnership.

An LLP is a recognizable business form similar to a corporate body, which inclusive of all provision of a traditional partnership firm with the advantages of a Separate Legal entity. As it contains the features, legal provision of both Company and Partnership, we can say it the HYBRID Entity.

LLP is governed by the Limited Liability Partnership Act, 2008 which came into force on 01/04/2008. This Act was introduced with the idea of promoting the SMEs MSME Sector (Micro Small Medium Enterprises) to govern their business of corporate style with the advantages of self-governance and less compliance.

Following are the benefit of the partnership firm.

  1. The important advantage of an LLP is that LLP is easier to start and manage and the process has lower formalities.
  2. It has a low cost of registration as compared to a Company.
  3. LLP is a separate body.
  4. LLP has no minimum requirement for capital.
  5. The present partners of the partnership firm would agree to contribute the contribution to the LLP.
  6. No requirement for compulsory Audit.
  7. Annual compliance is lesser than companies.

Following are the disadvantages LLP

  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition

Minimum Requirement to Start A LLP

 

  1. Members: Two people are needed to register the LLP. However, there is no limit on maximum partners.
  1. No Minimum Capital: required Capital, in the case of LLP, depends on the need of the business and the contribution of the partner in the partnership. The Stamp Duty is located on the amount of capital.
  2. Person requirement: One Designated partner of LLP must be from a resident in India.
  3. Name: The name of the LLP should be different from the other company and it must not be the same or similar to the name of any other company, LLP, or trademark which is registered or applied for.

All about Limited liability partnership

Limited Liability Partnership

LLP is a limited liabilities partnership firm, which is form and acts as a body corporate further but in the taxation aspect, it is similar to a general partnership.

An LLP is a recognizable business form similar to a corporate body, which inclusive of all provision of a traditional partnership firm with the advantages of a Separate Legal entity. As it contains the features, legal provision of both Company and Partnership, we can say it the HYBRID Entity.

LLP is governed by the Limited Liability Partnership Act, 2008 which came into force on 01/04/2008. This Act was introduced with the idea of promoting the SMEs MSME Sector (Micro Small Medium Enterprises) to govern their business of corporate style with the advantages of self-governance and less compliance.

 

 

Following are the benefit of the partnership firm.

  1. The important advantage of an LLP is that LLP is easier to start and manage and the process has lower formalities.
  2. It has a low cost of registration as compared to a Company.
  3. LLP is a separate body.
  4. LLP has no minimum requirement for capital.
  5. The present partners of the partnership firm would agree to contribute the contribution to the LLP.
  6. No requirement for compulsory Audit.
  7. Annual compliance is lesser than companies.

Following are the disadvantages LLP

  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition

 

Minimum Requirement to Start A LLP

 

  1. Members: Two people are needed to register the LLP. However, there is no limit on maximum partners.
  1. No Minimum Capital: required Capital, in the case of LLP, depends on the need of the business and the contribution of the partner in the partnership. The Stamp Duty is located on the amount of capital.
  2. Person requirement: One Designated partner of LLP must be from a resident in India.
  3. Name: The name of the LLP should be different from the other company and it must not be the same or similar to the name of any other company, LLP, or trademark which is registered or applied for.

 

Stepwise procedure to the conversation of existing partnership firm in LLP

In Recent past years more and more partnership firms are being converted into a Limited Liability Partnership (LLP). Because Government is providing a lot of features to the LLP such as unlimited partners, limited liability protection, transferability, survivability, etc., – making it more attractive as compared to a partnership firm.

A partnership firm that has completed its existence more than one year is eligible for their conversation in LLP.

Procedure for conversion of Partnership Firm into LLP

 

  1. Digital Signature

All the existing partners must have their DSC so that they can file requisite. Here is the first step to applying the DSC.

  1. DIN or DPIN

After obtaining the DSC all partners has to apply their DPIN/DIN, It is a unique identification number issued by the central government.

 

  1. Name Approval through RUN

After obtaining the DSS & DIN, the Firm has to Reservation the name of the LLP through RUN utility.

  1. Filing LLP Form 17

After reserving the name of LLP, the firm has to file form 17 with the following documents.

Consent letter from existing partners of the firm;

Statement of assets and liabilities of the present partnership firm duly verified and certified as true and correct by the Chartered Accountant in practice

 

Copy of the latest income tax return.

Proof of address of registered office of LLP;

Subscribers’ sheet including consent;

In-principle approval of regulatory authority, if required

Consent from all the secured creditors for the conversion of the firm into a limited liability partnership has been

Clearance or No Objection Certificate from Tax Authorities;

After completion of all required documents of form 17, after that form 2 for incorporation of documents of LLP.

 

After successful Conversion of Partnership into LLP, ROC will provide a Certificate of incorporation of LLP.

Once, the LLP is incorporated and the existing Partnership Firm would be deemed to be dissolved. And all previous properties, assets, interests, rights, privileges, liabilities, obligations of the firm are transferred to the LLP.

After incorporation of LLP final form 14 should be filed to ROC (Form for intimating to Registrar of Firms about conversion of the firm into limited liability partnership (LLP).

Frequently Asked Questions

Any individual/organization can become the partner of LLP including foreigners /NRI’s

No. For any licenses, permits, registrations, properties, approvals, etc., belonging to prior Partnership Company, the newly formed LLP must follow the required procedures with concerned authorities to transfer the assets.

legalsuvidha.com can incorporate an LLP in 14-20 days. The time took also depends on relevant documents provided by the applicant and the speed of approvals from the government. To ensure speedy registration, please pick a unique name for the proposed LLP and make sure you have all the required documents before starting the registration process

The LLP shall ensure that for twelve months commencing not later than 14 days after the date of registration, every official correspondence of the LLP bears the following:

• A statement that it was, as from the date of registration, converted from a firm into LLP
• The name and registration number, if applicable, of the firm from which it was converted

The main advantage is that in an LLP, there are fewer formalities after the business has been incorporated. For example, you need not file annual returns, etc. unless your income crosses a certain limit. An LLP is preferable if you are offering professional services, like a lawyer or architect. A Pvt. Ltd. The company is preferred if you want to launch a scalable enterprise

Once the procedure to convert Partnership to LLP comes to complete and the registrar provides the certificate of registration, the firm must follow the rules and regulations as applicable to LLPs.