Liability Partnership (LLP) Registration
- ✔ Combines flexibility of a Partnership with limited liability protection
- ✔ Separate legal entity – partners are not personally liable for business debts
- ✔ Minimal compliance compared to a Private Limited Company
- ✔ No minimum capital requirement
- ✔ Perpetual succession ensures business continuity
- ✔ Easy to add or remove partners
- ✔ Suitable for professionals, consultants, and startups
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Liability Partnership (LLP) Registration
Introduction
A Limited Liability Partnership (LLP) is a modern business structure introduced under the Limited Liability Partnership Act, 2008, combining the benefits of a traditional partnership and a private limited company.
It offers limited liability protection to partners while maintaining operational flexibility and low compliance costs.
LLPs are ideal for professionals, service providers, and small to medium enterprises
looking for legal recognition without the burden of heavy corporate formalities.
Why You Should Register
Registering as an LLP gives your business credibility and legal protection. Key reasons to choose an LLP include:
• Partners’ liability is limited to their contribution in the firm.
• The LLP can own assets, enter into contracts, and sue or be sued in its own name.
• It provides a recognized structure for professional and business partnerships.
• LLPs are trusted by clients, vendors, and banks for business dealings.
• Easy to convert into a Private Limited Company when scaling up.
Compliance and Taxation
• LLPs must comply with the LLP Act, 2008, and file annual returns with the Registrar of Companies (ROC).
• Audit is mandatory only if annual turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.
• LLPs are taxed at a flat rate of 30% under the Income Tax Act, plus surcharge and cess.
• No dividend distribution tax (DDT) applies, unlike companies.
• Partners’ share of profit is exempt in their individual tax returns.
Other Registrations Required
| Registration Type | Purpose |
| PAN & TAN (LLP) | For income tax and TDS compliance |
| GST Registration | For tax compliance and invoicing |
| Udyam (MSME) Registration | For government benefits and subsidies |
| Professional Tax Registration | As per state laws |
| Current Bank Account | To operate LLP finances |
When You Should Convert
You should consider converting your LLP into a Private Limited Company when:
• You want to raise equity funding or attract investors.
• Your business grows and requires a corporate structure.
• You plan to issue shares or bring in venture capitalists.
• You want to expand internationally or build brand credibility.
Advantages and Limitations
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Separate legal entitySeparate legal entity
-
Limited liability of partnersLimited liability of partners
-
No limit on maximum partnersNo limit on maximum partners
-
Perpetual successionPerpetual succession
-
Flexible management structureFlexible management structure
-
Cannot issue sharesCannot issue shares
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Higher compliance than traditional partnershipHigher compliance than traditional partnership
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Not ideal for venture capital fundingNot ideal for venture capital funding
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Public disclosure of financialsPublic disclosure of financials
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Conversion to company can be time-consumingConversion to company can be time-consuming
Comparison
| Parameters | LLP (Limited Liability Partnership) | Partnership Firm | Private Limited Company |
|---|---|---|---|
| Minimum Members | 2 | 2 | 2 |
| Maximum Members | No limit | 20 | 200 |
| Liability | Limited to contribution | Unlimited | Limited to share capital |
| Legal Status | Separate legal entity | Not separate | Separate legal entity |
| Compliance | Moderate | Low | High |
| Tax Treatment | Flat 30% | Flat 30% | Flat 25% (for SMEs) |
| Audit Requirement | Mandatory if turnover > ?40 lakh | Based on turnover | Mandatory |
| Fundraising | Moderate | Limited | Easier (via shares) |
| Ownership Transfer | As per LLP Agreement | Restricted | Freely transferable |
| Perpetual Succession | Yes | No | Yes |
| Cost of Formation | Moderate | Low | Moderate to high |
| Best Suited For | Professionals, SMEs, and service firms | Small family businesses | Growth-oriented startups |
Documents Required
- 1PAN Card of all designated partners
- 2Aadhaar Card / Address proof of partners
- 3Passport-size photographs of partners
- 4Proof of registered office address (utility bill, rent agreement, NOC from owner)
- 5Digital Signature Certificate (DSC) of partners
- 6Designated Partner Identification Number (DPIN/DIN)
- 7LLP Agreement duly executed on stamp paper
- 8Proof of contribution (bank statement or capital declaration)
For More Information
FAQs
What is a Limited Liability Partnership (LLP)?
An LLP is a hybrid structure that combines the benefits of a company and a partnership, providing limited liability to partners while maintaining operational flexibility.
How many partners are required to start an LLP?
Is an LLP a separate legal entity?
Is audit mandatory for an LLP?
How are LLPs taxed in India?
Can an LLP be converted into a Private Limited Company?
Can an LLP have foreign partners?
Need Help?
If you have any questions or need assistance with proprietorship registration, feel free to contact us.
Contact UsWhy Choose ARK Advisor for Proprietorship Registration?
ARK Advisor is your trusted partner for all business registration needs. Our team of experienced Chartered Accountants provides comprehensive support, ensuring a smooth and hassle-free registration process.
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