Limited Liability Partnership which is popularly known as LLP is new concept introduced by Government in 2009 in India. The main objective of introducing LLP was to bridge the gap between a partnership and somewhat complex private limited companies. As anticipated by the ministry LLP gained popularity very quickly, due to the low incorporation cost, reduced burden of compliance and comparatively easy reporting norms while retaining the attraction of Limited Liability
LLP is now considered as boon for start up entrepreneurs and small scale businesses, but if you see the list of LLP incorporated in India, there are LLPs like Godrej Buildcorp LLP & Smart Value Homes LLP (A Joint Venture Between TATA and Arvind Real Estate), which are from major business house in India. Thus Limited Liability Partnership proves to be a trusted vehicle simultaneously for fresher’s and veterans.
As the name indicates LLP is basically a partnership and hence at least two persons are required to apply for registration an LLP. Even corporates can be partners of LLP and that enables you to create a LLP in association with a Company or institutions as well. But at least one of the partners of LLP (called designated partner) must be Indian citizens.
The initial two steps of creating a LLP is similar to the process we follow for company registration in India. The obtaining of designated partner identification number (It is replaced with Director Identification Number or DIN now as the concept is same for both) and name approval process are exactly same. In the third step instead of filing Memorandum and Article of association we need to file consent from the partners along with registered office address proof.
The process will take somewhere around 5 to 15 working days depending upon the state where you intent to register your firm. The government stamp duty and Ministry of Corporate Affairs fee for registration of LLP is also very less and there is no minimum capital requirements for LLP (that means you can start an LLP even with ten thousand or twenty five thousand capital). Above all auditing is not mandatory for LLP up to a certain limit, which makes “the LLP option” a more attractive for start up entrepreneurs.