Limited Liability Partnership (LLP)

01 About the Limited Liability Partnership

An LLP is a separate legal entity, like a company, but is run like a partnership under an LLP agreement between the partners.

It suits professional practices, family businesses and small and medium enterprises that want limited liability without the full compliance of a company.

02 Benefits

• Partners are not personally liable for the LLP's debts beyond their contribution, or for another partner's misconduct.
• Separate legal entity with perpetual succession; partners can join or retire without dissolving the LLP.
• Lighter compliance than a company: no board meetings, and audit is required only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.
• No minimum capital requirement.
• Profit share received by partners is exempt in their hands, so there is no second layer of tax like dividends.
• An existing partnership firm or private company can be converted into an LLP.

03 Must understand before creating

• Flat 30% tax (plus surcharge and cess): there is no concessional rate like the 22% available to companies, so it can cost more at higher profits.
• Harder to raise equity: investors and venture funds generally prefer companies, and an LLP cannot issue shares or ESOPs.
• Two annual MCA filings are compulsory even if there is no business: Form 11 (annual return) and Form 8 (accounts and solvency). Late fee is ₹100 per day for each form.
• The LLP agreement must be filed with the Registrar within 30 days of incorporation, and every change of partners must be reported.
• Designated partners need DIN and digital signatures and must keep their KYC current.
• Foreign investment is allowed only in sectors open to 100% foreign investment under the automatic route without conditions.

Usually needed to register: Digital signatures and DIN for designated partners, name approval, registered office proof, and an LLP agreement.

04 Send your requirement

Tell us about the business you plan to set up. Your details go to our office by email and we will get back to you.