If You want to have a separate business entity for your business or you are in a General partnership deed and want to safeguard your personal assets from the risk that you are taking in your business then the Limited Liability partnership that is LLP is the way to go.
What is LLP and what are its benefits is broadly discusses already on startup freak and you can access it here http://www.startupfreak.com/limited-liability-partnership/.
Now to start a LLP there are some things to be taken care of before you go ahead and register it online (Yes of course you can register you LLP from the comfort of your home
Rules of Limited Liability Partnership [LLP]
- To form LLP there should be minimum two partners and minimum two designated partners having D PIN- Designated partner Identification Pin, just like DIN (Director Identification Number) required in case of Company.What is Designated Partner? – Answer : Designated members have some extra responsibilities on top of those of ordinary members. Specifically, it is the designated partners who are held liable for the correct filing and recording of the limited liability partnership affairs. It is they too, who will be subject to the criminal penalties of failure to comply. You may also make all the partners as designated partners in a small partnership.
- There is no limit on the maximum number of partners in LLP.
- Its not compulsory to make a partnership deed or LLP Agreement but if made will help in case of disputes. LLP agreement is a legally binding agreement between the partners who are in business together. It describes how the partnership will be run and the rights and duties of the members themselves. The deed of partnership is usually drawn up by a solicitor, who will consult with the partners about exactly what should be in it.
Steps to Register Limited Liability Partnership [LLP]
Step 1 : Apply for D PIN- Designated partner Identification Pin for the designated partners. And the procedure for this same as apply for DIN which we have already cover here What is Director Identification Number (DIN) & How to Get DIN. Go to MCA website http://www.mca.gov.in/MCA21/ , download Form 7, fill it and upload it on the site along with certified copies of address proof and Identity proof of the applicant. Digital Signature can be obtained from any of the Certifying Authorities in India.
- Amount : For DIN - 100 and for DSC - 400- 2650 (more details -http://www.mca.gov.in/MCA21/certifying-new.html)
Step 2 : Apply for LLP name - first apply for company name on FORM 1A and wait for the company name approval from ROC(Registrar of Company) upto 6 choices can be indicated.
- Amount : For name Approval 500
- Form 1 - Application for reservation or change of name
- Form 2 - Incorporation document and Subscriber’s statement
- Form 3 - Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein
- Form-4 – Notice of Appointment of Partner/Designate Partner, his consent etc.
- Website : https://www.tin-nsdl.com/
- Amount : For PAN - 94 and for TAN - 62
- Time: 7 days
What your LLP Agreement contains
- Basic information of all the Partners, Addresses and types of Business
- Amount of capital each partner is contributing to the business
- What is the profit share of each partner
- How much time will be contributed by each partner to the business
- Which division will be managed by whom and who takes the decisions
- Describe situations like adding new partner or what happens on death of a partner or wants to leave partnership etc