LLP refers to Limited liability partnership and is governed by Limited Liability Partnership Act 2008. Limited Liability partnership is a business entity which provides an advantage of limited liability to its owners and at the same time requires minimal maintenance. The directors of a private limited company have limited liability to creditors. In the case of default, banks / creditors can only sell company’s assets and not personal assets of directors.
Choose LLP because
- Dual advantages- Company and a Partnership
- No partner will be responsible for other partner’s misconduct
- Cheaper to incorporate than a private limited company
- Limits the liabilities of its partners
DOCUMENTS REQUIRED FOR LLP REGISTRATION
- Copy of PAN Card of partners
- Passport size photograph of partners
- Copy of Aadhaar Card/ Voter identity card
- Copy of Rent agreement (If rented property)
- Electricity/ Water bill (Business Place)
- Copy of Property papers (If owned property)
- Landlord NOC (Format will be provided)
MINIMUM REQUIREMENTS FOR LLP REGISTRATION
- Minimum 2 Partners
- No Capital Requirement
- At least one Designated Partner as Indian Resident
- DPIN for all Partners
WHAT IS LLP OR LIMITED LIABILITY PARTNERSHIP
LLP is a separate legal entity that gives the benefit of limited liability of company plus the flexibility of a partnership, wherein no partner is held liable on account of other’s partner misconduct. An LLP agreement is drafted to govern their rights and duties. Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008. Limited Liability Partnership is basically introduced to provide an opportunity to entrepreneurs where they can form of business organisation which is simple to maintain while at the same time providing limited liability to the owners.
STEPS INVOLVED IN LLP REGISTRATION
- Application of DSC & DPIN:
Our very first step in this direction would be getting Digital Signature Certificate (DSC) and Designated Partner Identification Number (DPIN) for the proposed Partners of the LLP. Within a time frame of 5 to 7 working days DPIN and DSC can be obtained from the proposed Partners. If the partners already have DSC and DPIN, then this step can be skipped.
- Name approval:
A minimum of one and a maximum of six proposed names are required to be given to the MCA. Subject to availability, naming guidelines and MCA processing time, we will get back to you with the Name approval within 5 to 7 working days. Names provided should ideally be unique and suggestive of company business.
- MOA & AOA submission:
Once name is approved, one needs to draft Memorandum of association and Articles of Associate. Both MOA and AOA are filed with the MCA with the subscription statement.
- Get incorporation certificate:
You can submit the required documents along with incorporation application. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time. Incorporation certification is a proof that company has been creation. It also includes your CIN number.
- Apply for PAN, TAN and Bank account:
Then you need to apply for PANand TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with the bank to open your bank account.
Factors to consider in LLP name selection (Rephrase this – it is copy of private limited
The name of your company is very important. Your company’s name is the first impression to your buyers, suppliers and stakeholders. It should, therefore, be relevant, suggestive and attractive. There are various factors that you should keep in mind while naming for your company.
- Short & Simple
The name should be concise and not be too long so that people can recall it easily.
The name of your company should be related to your business. It should fit the company’s branding . For example, Infosys refers to information systems or IT technologies.
Name of your company should not be same or identical to an existing company or trademark.
The name of your company should end with the suffix “Private Ltd” in a case of a Private limited company and “LLP” is a case of a limited liability partnership.
- Should not be illegal / offensive
The name of your company should not be against law. It should not be abusive or against the customs and beliefs of any religion.
A One Person Company can be formed by a single person i.e one person is enough to form such type of company, where the person would be the Director and Shareholder of the Company. Only additional requirement is he has to appoint a nominee for the company.
One Person Company has been newly introduced in the Companies Act, 2013.
Features of One Person Company:
- It is run by individuals yet OPC’s are a separate legal entity similar to that of any registered corporate.
- It must have only one member at any point of time and may have only one director.
- The member and nominee should be natural persons, Indian Citizens and resident in India. The term “resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.
- One person cannot incorporate more than one OPC or become nominee in more than one OPC.
- If a member of OPC becomes a member in another OPC by virtue of his being nominee in that OPC then within 180 days he shall have to meet the eligibility criteria of being Member in one OPC.
- No minor shall become member or nominee of the One Person Company or hold share with beneficial interest.
- Such Company cannot be incorporated or converted into a company under section 8 of the Companies Act, 2013.
- No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.
- An existing private company other than a company registered under section 8 of the Act which has paid up share capital of Rs. 50 Lakhs or less or average annual turnover during the relevant period is Rs. 2 Crores or less may convert itself into one Person Company by passing a special resolution in the general meeting.
Rules for Incorporating One Person Company:
- Only citizen’s of India can start a One Person Company in India or person resident in India i.e a person who stayed in India for a period of not less than One Hundred and Eighty days.
- A minor shall not become member or nominee of the One Person Company or can hold share with beneficial interest.
- No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except when threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.
Steps in Registration of One Person Company in India:
Four Simple Steps to register your One Person Company:
- Apply for Digital Signature Certificate – DSC
- Apply and Obtain Director Identification Number- DIN
- Application for Company Name-Apply with Six names and any one will be approved by the Registrar of Companies.
- Filing of Final forms to Registrar of Companies- After scrutiny of Documents Certificate of Incorporation would be issued.
Reservation of Company Name:
- Applying for company is the most important part of Company Registration process. A name of a company should consists of two parts: Prefix & Suffix.
Prefix- Should be unique and should not resemble any of the existing company names.
Suffix- Should reflect the business of your company.
- Name of the Company ends with OPC in closed bracket for eg: M/s. XYZ Technologies Private Limited (OPC).
- Have to submit six suggested names for the proposed company, where the Registrar of Companies will approve any one of the six and it will valid for 60 days from the date of application.
Impact of OPC in India:
- With the introduction of the concept of One Person Company, it has created a lot of confidence for the layman to think about starting his own company.
- The reason behind is low cost for registering, limited liability, Corporate Identity and not much corporate compliance has to be maintained.
- Most of the Proprietor firms are now being converted into One Person Company. It encourages the entrepreneurs to start his own company and to run his business without the intervention of third parties.
- It creates a favorable position for the layman to think about starting a company and this in turn boost up our country’s economy.