What is LLP Registration and Its Importance?

Limited Liability Partnership (LLP) offers a partnership structure where the liabilities of the partners are limited by the amount they put into the business. Limited Liability means that if the partnership fails then the personal assets of the partners are safe. There may be a loss in the assets in the partnership only. One partner is not liable for the other partner’s negligence.

LLP is governed by the LLP Act 2008 and LLP Rules 2009 and applied to the whole of India. LLPs are common in professional businesses and you should get yours registered. There are minimum requirements to be fulfilled while registering an LLP. The requirements are as follows:

• The LLP should have a minimum of two partners. 

• If a body corporate is a partner then a natural person has to be nominated as its nominee.

• It does not have any concept of share capital and each partner has to contribute towards the capital of LLP.

• All the designated partners will have to get the Director Identification Number (DIN).

• All the designated partners will have to get the Digital Signature Certificate (DSC).

• To register you will require the address proof for the office of LLP.

 Along with these minimum requirements, you will also need a few documents. You will need the PAN cards of the designated partners. If one of the partners is a foreign national then you will need a copy of the passport. You will need identity proof and address proof of the designated partners. 

You can approach a service provider who can help you out with all the paperwork. Some companies offer such services online. You can access the services from anywhere. You can fill out the form online and their experts will get in touch with you and help you complete the legalities. You can get your LLP registration done within 15 days. You will get your LLP incorporation certificate.

Benefits of LLP

LLPs are generally created by a group of professionals who have enough experience and clients. As the partners put in their money to do business, the cost of business goes lower. By pooling their resources together the partners will be able to get more profits from their activities.

An LLP can also have junior partners working for it who hope to become full partners someday. These partners are given a salary and have no stake in the partnership. Though they are professionals who can do the work that the partners bring in. These junior partners and employees can do the detailed work and free up the partners to focus on other areas. 

An LLP has a partnership agreement and the various partners can be added or retired as per the agreement. An LLP can easily add partners who bring in new business.

The LLP agreement includes the name of the LLP, name and address of partners and designated partners, the form of contributions and interest on contributions, profit sharing ratio, remuneration for partners, the rights of partners in case of admission, resignation and retirement, proposed business and rules for governing the LLP. The LLP agreement must be stamped as per the relevant stamp act of the state. If an LLP agreement is not made then the rules of the LLP act will be applicable.

Benefits of registering your LLP

 The benefits of registering your LLP are as follows: 

• In the case of a normal partnership, the partner's savings and property would be at risk if they are not able to repay the loans. In the case of an LLP, the partner's personal assets will be safe and only the investment to start the business will be lost. Limited liability is the biggest benefit offered by an LLP.

• LLP is a popular business structure and vendors, corporate customers and government agencies prefer to deal with an LLP rather than normal partnerships or proprietorship. 

• The statutory audit is not required for a LLP therefore it is easy to manage. LLP is an ideal option for small enterprises. Tax audits are also not required by LLP if it has a capital less than Rs. 25 Lac and a turnover not exceeding Rs. 40 Lac.

• A LLP will continue to exist even after its partners but it is not so with traditional partnership firms.