Tag Archives: LLP registration in India

llp registration in Delhi India

A hybrid corporate entity-Limited Lability Partnership

Limited Liability Partnership (LLP) is a new corporate structure introduced in India in April 2009, through the LLP Act of 2008. Aimed at small and medium sized businesses; a LLP is hybrid form
which integrates many of the benefits of limited corporations and the traditional partnership firms. In other words, it is an alternative corporate business vehicle that provides the benefits of limited liability of a company, and also allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as a partnership firm. Low registration fee and easy maintenance make LLP a preferred category of entity for many of the small and medium businesses in India.

Features
Most enticing features of a LLP are:

  • Simplicity and ease of formation and registration
  • No prescribed minimum capital requirement for each partner
  • Liability of each partner is limited to the contribution mention in agreement
  • Cost of formation is limited
  • Least regulatory compliances
  • Separate legal entity

The minimum number of partners required to incorporate an LLP is two. There is no constraint on the maximum number of partners in LLP in India. Among the partners, there should be minimum two designated partners with proper Designated Partner Identification Numbers (DPINs), and at least one of them should be resident in India. The rights and duties of designated partners are governed by the LLP agreement.

Documents Required
To register a LLP in India, the following documents are required:

  • PAN of the partners
  • Address proof of the partners
  • Utility bill of the proposed registered office of the LLP
  • No-Objection certificate from the landlord
  • A copy of rent agreement between the LLP and the landlord

PAN of the partners and their address proof are required to start the LLP formation procedure. The documents pertaining to the registered office of the LLP can be submitted after obtaining name approval for the LLP from the Registrar of Companies (ROC).

Following is step wise registration process for incorporation of Limited Liability Partnership (LLP):

Director Identification Number (DIN): Every individual intending to be appointed as designated partner of proposed limited liability partnership has to apply for allotment of DIN. Earlier partners had to apply for DPIN. Ministry of Corporate Affairs (MCA) has vide its notification amended the limited liability partnership rules, 2009. Now instead of DPIN, every partner who will be appointed as a designated partner has to apply for DIN. The application for allotment of DIN has to be made in Form DIR- 3. You have to attach the scanned copy of documents (usually Aadhaar and PAN) to the form. The form must be signed by a Chartered Accountant, Company Secretary, Cost Accountant or Advocate.

Digital Signature Certificate (DSC): Designated partner of proposed LLP, whose signatures are to be affixed on the e-forms has to obtain Digital Signature Certificate (DSC) from any authorized certifying agency. Also, they should obtain either class 2 or class 3 category of DSC. This is because all the documents for LLP are filed online and are required to be digitally signed.

You can click here & let our expert help you procure DIN.

Reservation of Name: Once two DINs are available, fill Form 1 for the reservation of name of proposed LLP. But before quoting the name in the form, it is recommended that you use the free name search facility available on MCA portal. The system will provide the list of closely resembling names of existing companies/LLPs based on the search criteria filled up. This will help you in choosing names not similar to already existing names. You need to provide six names in the order of preference in Form 1.

Once, the application for reservation of name is submitted to the MCA, it will be processed by the ROC in the State of Incorporation. The registrar will approve the name only if the name is not undesirable in the opinion of the Central Government and does not resemble any existing partnership firm or an LLP or a body corporate or a trademark.

Incorporation of LLP: Once the name approval application is accepted by the MCA and name approval letter is issued to the proposed Partners you have to apply for incorporation of the LLP through Form-2. All the details in the form must be filled correctly like – total number of partners and designated partners, amount of partner’s contribution, etc. You have to pay the prescribed registration fee based on the contribution of partners in the proposed LLP.

The form must be digitally signed by a person named in the incorporation document as a designated partner having DIN. Also, it has to be digitally signed by an advocate / Company Secretary / Chartered Accountant / Cost Accountant in practice. On the submission of the form, if the registrar is satisfied, they will register the proposed LLP. It takes 15-20 days for the registration of LLP subject to government processing time and submission of necessary documents.

File Limited Liability Partnership Agreement: LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners. It has to be carefully drafted as per the rules and provisions given in the Indian LLP Act of 2008. LLP agreement must be filed in form 3 online on MCA Portal. Agreement may be conveniently submitted online to the MCA, within thirty days from the date of registration of the proposed LLP. The LLP Agreement has to be printed on stamp paper. The value of stamp paper is different for every state.

To get your business registered as a Limited Liability Partnership, please get in touch with us. Also, for assistance in setting up business in India, company formation in India, income tax return filling, bookkeeping, accounting, GST and auditing. Click here.

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What is LLP in India?

In India a business organization can take many forms such a LLP (Limited Liability Partnership), Private Limited Company, Public Company etc. On 7th January 2009 with assent of the President the Limited Liability Partnership Act, 2008 came into effect. LLP has been a successful business vehicle since then as it combines the benefits of a partnership with that of a limited liability company, making it a lucrative option for start-ups. It keeps personal wealth of partners safe and on the other hand it helps leverage the benefits of a partnership.

In Limited Liability Partnership a partner is not bound by other partner’s acts; it can be due to negligence, misconduct etc. In other words, LLP can also be defined as a corporate entity which combines professional as well as entrepreneur behavior to operate in effective, efficient and flexible manner by providing benefit of limited liability and larger financial resources.

Requirements and Benefits of a LLP

  • Formation of a LLP requires a minimum of 2 partners and at least one of them shall be an Indian resident. Each partner will only be liable to the extent of its capital in the business unless found to have acted with fraudulent intentions and deceiving purposes to cheat creditors.
  • It is a separate legal entity formed under the LLP Act 2008 therefore It shall now possess the power to sue and be sued. Also, both an individual and a body corporate may become a partner.
  • Duties, rights & share of each partner are governed by an agreement among partners or between the LLP and partners subject to the act. Law gives the freedom to formulate the agreement per choice.
  • There is No minimum capital required to form a LLP, moreover creation of a limited liability partnership is inexpensive as compared to other forms of business.
    When paralleled with regular partnership a LLP is a preferred choice of lenders hence making borrowing easier. Also it has less stringent compliance and regulatory requirements making it easier for the business owners to focus on operations.

Disadvantages of a LLP in India

  • A Limited Liability Partnership is not allowed to go public this means that it can not be listed on the stock exchange and is not allowed to raise money from the general public.
  • Actions of any partner related to the LLP will have an impact on it and the entity will be legally held responsible for any liabilities thus created.
    Winding up a LLP can be a tedious and expensive task.

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Powerful Ways to Grow Your Business

Running your own business is often hard work, specially till you manage to build momentum and getting things moving smooth.
If you’re ambitious for your business, you won’t want to hang about. So here are nine growth strategies to help you get the most from your time and effort as a business owner or as an entrepreneur.

Before you give in to frustration, here is some advice that can help you to grow your small business successfully.

1. Patience Is Necessary

You’ll need to be patient. Contrary to what you see and hear, there is no such thing as a business becoming an overnight sensation. If you want your business to have a fighting chance, you’ll need to have a great deal of patience.

2. Be Prepared to Work
As a small business owner, you’ll need to work like you’ve never worked before. Instead of people delegating work to you, you’ll be assigning it to everyone else. You’re the one who is in charge now. You are responsible for ensuring that every single aspect of your business is covered.

If this is your first time establishing your own business, you might want to hire a consultant. Also, pay close attention to how other successful small business owners in your area are managing their responsibilities.

3. Find Your Customer Base

No matter where you look, no business can survive without a good customer base. This is the digital age, meaning the majority of your customers are somewhere online. Look for them on social media websites such as Twitter, Facebook, and Instagram.

Don’t underestimate the power of social media. Create a strong brand presence, and work on establishing your authority and credibility.

4. Learn Your Audience

So you know where the customers are, and you are ready to go after them. Before you try to get their attention, make sure you have something beneficial to offer them. Find out what it is they want, and work with your marketing team so you can figure out effective ways to deliver that.

5. Be Mindful About What You Post

Anything that you post online and on social media should be tasteful, engaging, and positive. Don’t go crazy and post irrelevant or insubstantial stuff just to gain visibility. Establishing your business as a good and credible one takes time. When you post information that does not appeal to or relate to your intended audience in any kind of way, you hurt your progress and could lose some of your following.

6. Encourage Your Customers to Share
One way you can get your customers to boost your marketing efforts is to encourage them to share their experiences on social media. Make sure that the platform you use is set up so you can monitor what is posted. It is not possible for you to please all of your customers, so don’t be alarmed if you get bad reviews occasionally. Although you might not want negativity on your social media sites, you should not get in the habit of extreme censorship or you risk your organization’s credibility.

7. Network Everywhere

Everywhere you go is a perfect opportunity for you to network. Even if you are going to the grocery store, you are bound to come across someone who is interested in the products and services you offer. Or you might encounter someone in a position to offer you some useful advice.

Many local businesses have bulletin boards and community areas where business owners like yourself can leave flyers and business cards for people in the local community to find. This method is still an effective way to network, so make sure you take advantage of networking opportunities every chance you get.

8. Research Your Competitors

If you want to know how well your business is doing or if you are covering every aspect of marketing possible, take a look at what your competitors are doing. Watch their commercials and go online to see what deals they are offering.

Research what their customers are saying about them. While you are doing your research, you’ll be able to see what your competitors’ shortcomings are. You’ll also be able to determine what services and products their customer base wants so you can tailor your offerings accordingly.

9. Pay Attention to the Trends

Entrepreneur David Kiger notes the importance of business owners staying focused on trends in their industries. These trends can give entrepreneurs direction and also keep them from using up valuable resources. Think of trends as guidelines for you to follow while you work on growing your business so you can better meet the needs and demands of your customers.

Don’t let inexperience or a lack of time keep you from achieving success with your business. You just have to work harder and longer until you see your dreams becoming more of a reality. Work on improving your strategies and sticking with them long enough to see what works and was doesn’t. Then you can make adjustments as needed to improve your chances for success.

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Why Register a Limited Company?

A limited company is most popular business models for all sizes of organisations. This is due to the many benefits it provides over other types of legal business structures. Whether you choose to register a commercial company limited by shares or a non-profit company limited by guarantee, there are a number of perks that far surpass those available to the sole trader or contractor working through an umbrella company.

Types of Private Limited Company
Private limited companies can be registered as ‘limited by shares’ or ‘limited by guarantee’, but what’s the difference?

Limited by shares

    Used by profit-making enterprises and contractors.
    Owned by one or more people known as ‘shareholders‘, or ‘members’.
    Day-to-day operations managed by one or more people known as ‘directors’.
    Company is dividend into shares, each of which represents a percentage of the business.
    Members receive a proportion of profits in relation to their percentage of ownership.
    Liability of members is restricted to the nominal value of their shares.

Limited by guarantee

    Used by non-profit enterprises and charities.
    Owned by one of more people known as ‘guarantors‘, or ‘members’.
    Managed by directors.
    No shares or shareholders.
    Members do not usually receive any sare of profits.
    Liability of members restricted to the nominal value of their guarantees.

Top 7 Reasion to Register limited company.

1. Minimising personal liability
Limited liability is one of the biggest benefits of running a business as a limited company. Protecting your personal assets is crucial if you plan to operate in the public domain or provide high value supply or services that could potentially lead to liability claims and put your home and finances at risk.
If your business is unable to pay its creditors or is faced with legal claims for damages, you will only have to contribute the nominal value of your unpaid shares or guarantee. Most shares and guarantees have a nominal value of £1 each. Beyond the limit of member liability, the business itself is wholly responsible.

2. Professional status
Limited status could significantly boost the perceived value of your business, thus attracting more clients and investors. Many large corporations refuse to award contracts to sole traders, instead choosing to deal exclusively with other limited companies. This is because they are held in higher regard.

3. Tax efficiency and planning
Limited companies pay 20% Corporation tax on profits, as opposed to 20-45% Income Tax paid on sole trader profits. This offers greater flexibility for tax planning.
Reinvesting surplus cash
Rather than withdrawing all available profits each year and paying more personal tax on top of your Corporation Tax liability, you can retain surplus income in the business to pay for future operational costs and growth. This makes more sense than withdrawing all profits, paying Income Tax and reinvesting your own finances when the business needs additional capital.
Deferring personal income
You can defer the withdrawal of profits to a later tax year in which a lower rate of business or personal tax tax is due. This is an efficient strategy if the withdrawal of all available profits would take you into a higher Income Tax or Dividend Tax bracket.

4. Higher personal remuneration
As a director and shareholder, you can keep your income below higher tax rate thresholds and reduce your National Insurance Contributions by issuing your take-home pay as a combination of a salary and dividends. This strategy will enable you to avoid entering the higher and additional Income Tax brackets

5 . Separate legal identity
Unlike the sole trader structure, a limited company is a legal ‘person’ in its own right, with an entirely separate identity from its owners and directors. As a result, companies can enter into contracts in their own name and are responsible for their own debts and liabilities.
The owners are only liable for the value of their unpaid shares or personal guarantees, rather than the full extent of the company’s liabilities. If a company becomes insolvent, it is the business itself which is declared bankrupt, not the shareholders or directors
Furthermore, this means that companies enjoy perpetual succession and survive the death or ownership of the original shareholders or guarantors. The business can be sold or transferred to other people at any time, thus enabling the company to continue to exist with minimal disruption to clients and employees.

6. Credibility and trust
By operating as a limited company, potential clients will assume your business is bigger and more established than it may be in reality. This professional, corporate image will add valuable prestige and credibility to your business. Potential clients, suppliers and investors are also more likely to trust your firm.
Image is important and can drastically improve your competitive advantage when bidding for valuable contracts, particularly if you provide high-risk services in the financial, IT or construction industry.

7. Investment and lending opportunities
Companies can have multiple owners, so it is possible to raise additional capital by selling portions (‘shares’) in the business to new investors. Generally, companies also have more lending opportunities than sole traders, and certain banks will only lend to incorporated businesses. Furthermore, it is often possible to secure a loan for a company without the need for shareholders or directors to provide security against their own property.

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