How to Start a Limited Liability Partnership (LLP) in India

If you’re considering starting a Limited Liability Partnership (LLP) in India, this article will guide you through the essentials, from understanding what an LLP is, to the benefits, costs involved, and the steps to set one up.

What is a Limited Liability Partnership (LLP)?

An LLP combines the flexibility of a partnership with the advantages of limited liability of a company. It operates as a separate legal entity, so the partners are not personally liable for the debts of the business beyond their agreed contributions.

Minimum Requirements

  • Partners: At least two partners are required.
  • Designated Partners: At least two designated partners, with at least one being a resident in India.
  • Registered Office: A physical location in India, with proof of address.

Benefits of a Limited Liability Partnership

  • Limited Liability: Protects each partner’s personal assets from the liabilities of the business.
  • Flexibility in Management: Less stringent regulations compared to a private limited company.
  • No Minimum Capital Requirement: Start an LLP regardless of the amount of capital you have.
  • Tax Benefits: Certain tax benefits not available to regular partnerships.

Cost of Setting Up an LLP

  • Total Cost: Approximately Rs 8,000, which includes government fees and professional fees for drafting and filing documents.

Steps to Form an LLP in India

  1. Obtain Digital Signatures

    • The first step is obtaining digital signature certificates (DSC) for the designated partners, necessary for the online filing of documents.
  2. Reserve Your LLP Name

  3. Gather Necessary Documents

    • Personal Identification: PAN, Aadhaar, and address proof of the partners.
    • Registered Office Proof: Document proving the location of the LLP’s office.
    • Designated Partners’ Details: Obtain Designated Partner Identification Number (DPIN) for each designated partner.
  4. File Incorporation Documents

  5. Registration and Approval

    • Once the application is submitted, it will be processed by the Ministry of Corporate Affairs. Upon approval, you’ll receive the incorporation certificate, which includes your LLP’s registration number.

Frequently Asked Questions

LLP registration package includes:

• Government Fees
• Professional fees
• Digital Signature for 2 Partners
• Name Approval
• Agreement

The steps after LLP registration are:

  1. Open bank account within 30 days

LLP registration process can be completed in 10-14 working days as follows

  1. Preparation of documents – 2 days
  2. DSC Application – 1 Day
  3. Name Approval– 3 days
  4. Filing of form – 3 days
  5. Approval – 5 days

Minimum 2 partners and 2 shareholders are required for LLP registration. The partners and the shareholders can be a same person. Partners and shareholder can be different people too.

Even companies or LLPs can be the shareholder of the LLP.

No a LLP cannot be coverted into Private limited Company.

Yes LLP can be registered at residential or commercial address. You need to have a electricity bill and the NOC of the owner.

The LLP cannot be registered at the virtual address.

Yes anyone can a be a director in the LLP if he meets the following conditions:

  1. Age should be more than 18 years
  2. Not criminally prosecuted
  3. Of sane mind
  4. Not bankrupt

The minimum capital can be Rs 1 as well. The authorized capital should be minimum Rs 1 lakh.

Please refer our blog on this here. But the basic capital to register a name are:

  1. It should be unique
  2. There should be no trademark registered of the given name
  3. It should have a prefix and activity word
  4. It should not have words like finance, minister etc
  5. For words like Global, Corporation, World the capital should be more that 25 lakhs
The income tax rate of the LLP is 30% plus cess on the profits

As per the government rules you can be a partner even if you are a employee.
But you need to check your employment agreement to see if your Employment Agreement allows you to be a partner.
Our suggestion would be that you be a partner instead of a designated partner.

The minimum cost to maintain a LLP even if it does not have any sale is as follows:
ROC Filing – Rs 5000
Income Tax Return – Rs 4000
The other compliances like GST returns, PT returns, Partner KYC will be charged extra.

The government fees for LLP registration is as follows:
Name Approval – Rs 200
Government – Rs 500
Pan and Tan – Rs 160
Digital Signature – Rs 3000

Every partner of an LLP would be, for the purpose of the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of the limited liability partnership whether arising in contract or otherwise, is solely the obligation of the limited liability partnership. The liabilities of LLP shall be met out of the property of the LLP.

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