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For a registered LLP (Limited Liability Partnership) company, it works as a legally structured entity. The business registration of a LLP constitutes the legal establishment and formal registration of a company as an LLP. Well, for the startups, building a company is an exciting journey. A company builds with the new innovations that bring ideas for growth. However, before starting this journey, the entrepreneurs were required to lay a strong foundation. Additionally, this step mostly starts by choosing the right legal structure. Moreover, to support aspiring entrepreneurs, the Government of India has created a legal framework known as the LLP Company Registration.
This structure has become one of the most recognized and beneficial options. The step forward by the Ministry of Corporate Affairs (MCA). While registering your company as an LLP has now become easy. You are merely “1 click away” from establishing your LLP. Let’s dive into this vlog to know the importance of limited liability partnership and transform your business into an LLP.
Whenever a business registers with any legal structure, it goes through its benefits and disadvantages. Before exploring how an entrepreneur can form an LLP incorporation, let’s understand why it is perfect for businesses. The LLP formation that comes with a genius flexibility and the limited liability benefits. The common benefits of a registered limited liability partnership company are
1. Limited Liability Protection: This is the biggest benefit for which companies register for an LLP. With the legal framework of LLP registration, a company owner’s personal assets, like a car, savings, and home, are safe. In case of financial risks due to debts or liabilities, your personal assets will not be affected. In contrast to the conventional partnership model, this represents an enhanced version.
2. Separate Legal Entity: A registered LLP company depicts a separate legal entity. This means it differs from the partners as well as can enter into contracts and own property. This framework is best to keep the business stable and credible.
3. Lower Compliance Burden: Unlike a private limited company, an LLP-registered company has fewer and simpler legal requirements. The formation is for the need for less paperwork, and also has the minimum annual maintenance costs. These advantages attract entrepreneurs for LLP incorporation.
4. Less capital requirement: There is no bar set in LLP registration for capital requirements. A startup can establish an LLP in India with a minimal investment, which can be as low as Rs 1,000. Well, the minimum capital requirement for company formation makes the LLP registration a top choice by entrepreneurs.
5. Credibility and Trust: Being a legally registered company in India is the gateway to trust and credibility. An LLP-registered online company signals to the clients and the investors that it is trusted. It is essential to increase the credibility of a business among its customers.
We already mentioned the benefits of an LLP company. But here is a catch: the business required to fulfill its legal structure. Sometimes, these benefits cannot be proven critical for some companies. Here is why:
Minimum of Two Partners
The framework of an LLP registered online restricts the entry of fewer than two partners. A registered LLP company needs to have at least two partners.
Designated Partner Requirement
An LLP must have a minimum of two designated partners, who are accountable for ensuring the LLP adheres to legal obligations.
Funding Limitations
Also Read This: Limited Liability Partnership Registration
An LLP incorporation is restricted from equity shares like companies. This means, LLPs cannot raise capital. This creates fewer opportunities for the companies who are thinking of working on a large-scale venture and need funding early.
To register a company as an LLP incorporation, it is essential to deal with the registration procedure, the documentation, and the legal guidelines. The steps you need to follow are
Step 1: Obtain DSC
A Digital Signature Certificate (DSC) is required for the electronic signing of documents. As all documents are completed online via the MCA portal, they need to be signed online, which is crucial for security.
This certificate is obtained by the designated partners of the company. In India, the DSC is issued by a certifying authority, and the cost for obtaining it varies based on the Chartered Accountant and the duration of service.
Step 2: Obtain DPIN
A Designated Partner Identification Number, abbreviated as DPIN, serves as a unique identifier. This number is issued by the Ministry of Corporate Affairs (MCA) to the designated partners of LLPs.
For the DPIN, the individual can apply for it via the LLP incorporation form (FiLLiP). If a partner of the LLP already possesses a Director Identification Number (DIN), they may utilize it as their DPIN.
Step 3: Name Reservation
To register a company as an LLP, you must select a unique name for the organization. The name of the organization must comply with the name regulations under the LLP Act, 2008. It is important to ensure that the chosen company name does not already exist.
The entrepreneurs can use the RUN-LLP form.
It is to reserve a unique name for an LLP company with the MCA. Additionally, it is essential to verify the availability of the chosen name.
If the chosen name aligns with legal requirements, the Central Registration Centre grants name approval. For the registration of the name, a fee of Rs 200 is required.
Step 4: LLP Incorporation
This step is to introduce Mark, an LLP company, as official. For business registration, the applicant fills out the FiLLiP form. It is essential and comprehensive. You need to provide the details as follows:
Step 5: The required documents
For the LLP registration in India, the business needs to attach the important documents that work as evidence. The required documents are:
In essence, building a business as an LLP company in India is a strategic move for entrepreneurs. From providing a limited liability opportunity for personal assets to flexible management, it has its best legal frameworks. By navigating the company registration in India procedure with expert guidance, the operators can transform their entrepreneurial vision. Start now to make your business legally recognized.