INTRODUCTION

Launching a company in India? LLPs, or limited liability partnerships, are very popular right now! LLPs combine the advantages of corporations and partnerships to provide security, flexibility, and a hint of flair. Let’s learn about LLP compliance

An LLP: What is it?

Consider it to be a company and a partnership firm together. An LLP can have as many partners as desired, although two is the minimum requirement. The finest aspect? The LLP has perpetual succession and the partners’ personal assets are protected by restricted liability.

A Brief History: The Limited Liability Partnership Act of 2008 brought LLPs to India. The guidelines for LLPs are established by this statute.

Important Players:

• A minimum of two partners is required.
• No fewer than two designated partners, at least one of whom must be an Indian citizen. The superheroes in charge of adhering to the LLP Act and the LLP agreement are these authorized partners.

Why Opt for LLP?

• Limited Liability: Safeguards your individual possessions.
• Eternal Succession: Your law practice can continue to thrive.
• Flexibility: Take advantage of a partnership’s simplicity and a company’s security.

Features of LLP

• Differentiated Legal Entity: LLPs, like corporations, are separate legal entities. Consider it as your company purchasing a superhero outfit!
• Partner Party: There is no limit on the amount of partners you can have, but you must start with a minimum of two. More is always better!
• Designated Heroes: A minimum of two designated partners are required, with at least one of them needing to be an Indian citizen. These people are the superheroes of compliance.
• Restricted Liability: The total amount of each partner’s liability is equal to their share. No matter what, your personal assets are always secure!
• Low-Cost Establishment: Setting up an LLP won’t cost the earth. Put your money away for more thrilling adventures!

• Absence of a Minimum Capital: You don’t need to start with a ton of money. You can begin with what you now have.

Advantages of LLP

• Independent Legal Body : Apart from its partners, an LLP has a distinct identity of its own. It gains the trust of stakeholders by having the ability to sue, be sued, and sign contracts in its name.
• Limited liability : Partners’ liability is capped at the amount they have contributed. In the event that the LLP experiences financial difficulties, personal assets are safeguarded.
• Minimal Cost & Reduced Compliance : Creating an LLP is inexpensive and requires little documentation. The Annual Return and the Statement of Accounts and Solvency are the only two yearly statements that are necessary.
• Absence of a Minimum Capital Need : You can invest any amount of money to launch your LLP. You have freedom because there isn’t a minimum investment requirement.

Disadvantages Of LLP

• Penalties for Failure to Comply : Deadlines not met? Ahead of you, heavy fines! To avoid penalties, even dormant LLPs are required to submit annual returns to the MCA.
• Closing and Disintegration : There must be two partners in an LLP. Dissolution may occur if this falls below for a period of six months or if it is unable to pay debts.
• Difficulty in Raising Capital : Angel investors and venture capitalists who favor company structures find it difficult to court LLPs because they cannot provide stock.

LLP Registration Process

Step 1: Acquire a Certificate of Digital Signature (DSC) : Get your virtual superhero cape first! Apply to accredited organizations for a Class 3 Digital Signature Certificate (DSC). This enables safe online signing of all LLP documents. Choose carefully because costs vary!

Step 2 : Request a DPIN, or designated partner identification number. : Get your DPIN now! Those who desire to be partners who are natural people (sorry, robots) must apply using Form DIR-3. A trusted counsel, such as a CA or CS, should sign it and attach scanned copies of your Aadhaar and PAN.

Step 3: Approval of Name : Discover the distinct identity of your LLP! To prevent duplicates, use the name search feature on the MCA site. Apply using RUN-LLP within three months after approval. Expert advice: just in case, have a backup name!

Step 4: LLP Incorporation : It’s confirmed! Submit FiLLiP to the Registrar in the location of your LLP’s office. During incorporation, pay the fees and, if necessary, apply for a DPIN or DIN. This is where your authorized name goes!

Step 5: Submit an LLP agreement : Now for the LLP partners’ agreement! Within thirty days of incorporation, submit Form 3 online. Recall that for an official touch, print it on stamp paper (amount varies by state).

Documents Required for LLP Registration

Essential Documents for Your LLC: Exposing the Paper Trail!

• Verification of Registered Office Address : Find your LLP a comfortable place! If it is rented, make sure you have a copy of the lease and the landlord’s no-objection certificate, which gives you permission to use the space as your “registered office.” Remember to include a recent utility bill (phone, electricity, or gas) with the owner’s name and full address (dated within the last two months).
• Certificate of Digital Signature (DSC) : Obtain your digital certification! Digital signatures on all LLP papers and applications require a Digital Signature Certificate (DSC), which can only be obtained by one designated partner. It serves as your entry pass into the virtual business environment. 

LLP Forms

The LLP Registration Plan amount includes the following services:

• LLP Deed Drafting: Crafting your LLP’s official partnership script!
• Designated Partner Identification Numbers (DPIN): Get your partners their unique ID badges!
• Digital Signature Certificates (DSC): Your partners’ digital superhero capes for signing documents online securely!
• Incorporation Certificate: Your LLP’s birth certificate from the government!
• Government Fees: Covered up to Rs. 1 lakh capital contribution by partners.
• Stamp Duty and Notarisation: Up to Rs. 2000/- for LLP Deed, valid in any state across India.

Time Involved for LLP Registration

Step-by-Step Adventure Timeline:

• Day 1-3: Obtain your Digital Signature Certificate (DSC) – your LLP’s digital superhero cape!
• Day 4–6: Apply for your LLP partners’ special IDs, called Designated Partner Identification Numbers (DPINs).
• Day 7-9: Find the ideal identification by reserving your LLP’s distinctive name with RUN-LLP!
• Day 10: Submit Form FiLLiP for the creation of an LLC; complete the paperwork with the Registrar and watch for your Certificate of creation!

Time in total: about ten days

Compliances of LLP

• Form LLP-3: Concluding the Partnership 

Create your LLP Agreement and submit it in LLP Form-3 to the Registrar within 30 days of the LLP Incorporation. It’s similar to laying the groundwork for your trip together!

• Transactions Dancing in a Bank Account Bonanza!

In the name of your LLP, open a current bank account. This account should be used for all commercial transactions because that’s where the magic happens!

• Tan and Pan: The Tax Pair

Obtain your LLP’s PAN and TAN from the Department of Income Tax. For added convenience, it is now packaged with your Certificate of Incorporation!

• Register for GST: Get into the Big League

Join the GST club if your LLP’s yearly turnover reaches Rs. 40 lakhs (Rs. 20 lakhs for service providers). It’s your pass to smooth commercial dealings!

Annual Compliance for LLP:

• Accounts Statement and Solvency (Form-8): Annual Financial Assessment: Complete your LLP’s annual financial statements by March 31st.
• Form-8 Filing: Within 30 days of the financial year’s end, at least two partners collaborate to file Form-8 with the Registrar. Bonus: Your specialist in temporary resolution has signed this now!
• Form 11: Annual Return: Managerial Magic In brief: LLP management changes or stability should be summarized in Form-11, which is due 60 days after the end of the fiscal year.
• Income Tax Return (ITR): The ticking of the tax clock Submit your LLP’s income tax return by July 31st, or by September 30th if you’re being audited for taxes.
• DIR-3 KYC: Get to Know Your Spouse To keep relationship facts up to date and transparent, each designated partner files DIR-3 KYC by September 30th each year.
• Audit:  Financial Spotlight: To guarantee their financial stability, LLPs with a turnover or contribution over Rs. 40 lakhs or Rs. 25 lakhs may require an audit.

What are the Consequences of Non-Compliance for LLPs?

• Penal Hazards : Problems with Late Filing: Form-11 or Form-8 Delayed? A penalty of Rs. 100 each day of nonpayment is to be expected. Money is time!
• Anchor for Annual Accounts: Unfailing Without It: Your LLP cannot be wound up or closed without submitting those important annual accounts. They are the lifeblood of your company!
• Serious Penalties Upcoming: Failure to comply Horror: Are you missing any essential requirements? Prepare yourself for severe fines. Keep moving to stay clear of the storm!

TMWALA: Your LLP Compliance Companion

• Timely Reminders: TMWALA sends alerts for Form-11 and Form-8 filings to prevent Rs. 100/day penalties.
• Document Management: Organizes annual accounts digitally for hassle-free submissions during wind-up.
• Expert Guidance: Provides clear instructions and support for navigating compliance requirements.
• Real-time Tracking: Monitors compliance status and generates reports to keep you informed.
• Risk Mitigation: Helps implement strategies to avoid heavy penalties for non-compliance.
• User-Friendly Interface: Easy-to-use platform for efficient management of LLP compliance tasks.

TMWALA ensures your LLP stays compliant and penalty-free with streamlined processes and proactive support.

IMPORTANT FAQs

1. What is an LLP (Limited Liability Partnership)?

Ans. An LLP is a hybrid business structure that combines features of a partnership and a corporation. It offers limited liability to its partners and perpetual succession like a corporation.

• How many partners are required to form an LLP?

Ans. A minimum of two partners is required to form an LLP, and there is no upper limit on the number of partners.

• What are the advantages of choosing an LLP over other business structures?

Ans. LLPs offer limited liability to partners, perpetual succession, flexibility in management, and reduced compliance requirements compared to corporations.

• What is the process for registering an LLP in India?

Ans. The registration process involves obtaining a Digital Signature Certificate (DSC), applying for Designated Partner Identification Number (DPIN), name reservation, filing incorporation documents (Form FiLLiP), and drafting the LLP agreement (Form 3).

• What are the annual compliance requirements for an LLP?

Ans. Annual compliance includes filing Form-8 (Statement of Account & Solvency) and Form-11 (Annual Return) with the Registrar of Companies, maintaining accounts, filing Income Tax Returns (ITR), and obtaining GST registration if applicable.

• What happens if an LLP fails to comply with annual filing requirements?

Ans. Non-compliance can lead to penalties, such as Rs. 100 per day for late filing of Form-8 or Form-11. Failure to file annual accounts may prevent the LLP from being wound up or closed.

• Can LLPs raise capital from investors like companies do?

Ans. LLPs do not have shares or equity, which makes it challenging to attract investments from angel investors or venture capitalists who typically invest in companies.

• What documents are required for LLP registration?

Ans. Essential documents include proof of registered office address, Digital Signature Certificate (DSC) of designated partners, identity and address proofs of partners, LLP agreement, and forms required for incorporation.

• Is there a minimum capital requirement to start an LLP?

Ans. No, there is no minimum capital requirement for starting an LLP. Partners can contribute any amount of capital as agreed upon in the LLP agreement.

1.  What is TMWALA and how can it help LLPs?

Ans. TMWALA (The Most Wonderful LLP Assistant) is a digital platform that assists LLPs in managing compliance tasks, including timely filing of forms, document management, and providing expert guidance to avoid penalties for non-compliance. It ensures LLPs stay compliant and operationally efficient.