Limited Liability Partnership

What is LLP?

LLP is a body corporate that includes features of both a partnership firm governed by the Indian Partnership Act, 1932, and Private Limited or Limited Company governed by the provision of Companies Act,2013. Since LLP contains elements of both “corporate structure” as well as “partnership firm structure”, LLP is called a hybrid between a company and a partnership. Every LLP shall have at least two partners and there is no restriction on a maximum number of partners. Further, at least one of the designated partners should reside in India. The liability of partners is limited except in case of an unauthorised act, fraud, and negligence and a partners are not personally liable for the wrongful acts or omission of any other partner. An obligation of LLP whether arising in contract or otherwise is solely the obligation of the LLP.

NOTE: Any Provisions of the Indian Partnership Act, 1932 shall not apply to a Limited Liability Partnership Firm.

Documents Of Partners

  • ID Proof of Partners – PAN card & Aadhar Card.
  • Address Proof of Partners – Voter’s ID/Passport/Driver’s license.
  • Residence Proof of Partners – Latest bank statement/telephone bill/ mobile bill/ electricity bill or gas bill (not old than 2 months).
  • Photograph – Partners should also provide their passport size photograph, preferably on white background.
  • Passport (in case of Foreign Nationals/ NRIs) – For becoming a partner in Indian LLP, foreign nationals and NRIs have to submit their passport compulsorily. Passport has to be notarised or apostilled by the relevant authorities in the country of such foreign nationals and NRI, else Indian Embassy situated in that country can also sign the documents.
  • Foreign Nationals or NRIs have to submit a proof of address also which will be a driving license, bank statement, residence card or any government issued identity proof containing the address.

  • If the documents are in other than the English language, a notarised or apostilled translation copy will be also be attached.

Documents Of LLP

  • Proof of Registered Office Address.
  • If on rented – Rent Agreement and a No Objection Certificate from the landlord has to be submitted.
  • If Owned – ownership proof of proposed registered office like electricity bill.
  • Digital Signature Certificate.
  • All documents to be self attested.

Other Information

  • Name of the Partnership firm.
  • Profit Sharing Ratios of each partners.
  • Total Capital to be introduced by each Partner.
  • Other contributions to firm by Partners like any plant & machinery, equipment, etc.
  • Educational Qualification of the Partners.
  • Place of birth of Partners.
  • Email id & mobile numbers of both the partners (preferably linked to aadhar number).

Benefits of LLP

  • Lower Cost of Formation – The Cost of registering LLP is low as compared to The Cost of incorporating privately limited or public limited company and The Formation of LLP is also very easy as compared to private or public companies.
  • No Minimum Capital Requirement – LLP can be started with a Minimum amount of Capital money. Capital may consist of tangible, movable, or immovable assets like land, machinery etc. or intangible property.
  • No Limit on partners of business – There is no limit for partners in LLP. It can be formed with minimum 2 partners while there is no limit on maximum number of partners.
  • Lower Compliance Burden – There is No need to maintain any statutory records except books of account. Less government intervention and Less Compliance level is enforced on LLP as compared to restrictions enforced on other business entities.
  • Dividend Distribution Tax not applicable – No Dividend Distribution Tax is payable by LLP, so The profits of The LLP can be easily withdrawn by The partners. No Requirement of Compulsory Audit – All companies whether private or public irrespective of their share Capital required to get their accounts audited, but in case of LLP, There is No such mandatory requirements.
  • An audit is required in LLP only when – The Contribution of the LLP exceeds Rs. 25 Lakhs, or The Annual Turnover of the LLP exceeds Rs. 40 Lakhs.
  • Board Meetings – There is no mandatory requirement to hold 4 meetings as required in companies Act. The partners can meet as per their convenience or need basis. Partners can specify about the meetings details and schedule in LLP agreement.

Statutory Compliance In LLP

All LLP are required to maintain compliance and file certain statutory compliance with the government each year. Below are the major compliance requirements for an LLP: –

  • BOOKS OF ACCOUNT – An LLP must maintain proper books of account relating to its affairs each year on cash or accrual basis. The books of account must be kept as per double entry system of accounting and shall maintain the same at its registered office.
  • ROC ANNUAL RETURN FILING – An LLP has to file below 2 types of MCA (Ministry of Corporate Affairs) annual return each financial year along with the prescribed fees.
E Form
  1. Annual Return (Form 11).
  2. Statement of Account & Solvency (Form 8)
Due Date
  1. Within 60 days of end of Financial Year.
  2. Within 30 days from the end of Six months of the Financial Year.

Income Tax Return Filing

  • An LLP is required to file Income tax return each year, irrespective of revenue or profits. LLP can file its return of Income in ITR-5.
  • LLP that entered into an International Transaction with associated enterprises or undertook certain specified Domestic Transactions are required to file Form 3CEB (Form 3CEB must be certified by a Chartered Accountant).

NOTE: If the Contribution of LLP exceeds Rs. 25 Lakhs or annual turnover of LLP exceeds Rs. 40 Lakhs, then it is mandatory for LLP to get its account audited by practising Chartered Accountant.

  1. In case Audit is not required.
  2. In case Audit is required.
  3. LLP involved in International Transaction.
Due Date
  1. 31st July of every year.
  2. 30th Sept of every year.
  3. 30th Nov of every year.