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As an entrepreneur, India has a variety of business opportunities. You can choose from a variety of business models, but you must first understand the requirements, benefits, and drawbacks of each one. You must determine which type of business is most advantageous to you. When it comes to partnerships, one of the most significant disadvantages is unlimited liability. It means that the partners’ personal assets are at danger, yet many types of businesses also offer the benefit of restricted liability. For example-LLP or a private limited business
Entrepreneurs now days’ converting the partnership firms to LLP’s to prevent risk of unlimited liability. There are many reasons for converting partnership firm into an LLP and they are as follows
LLP is very popular among small & medium sized businesses. Any partnership firm want to convert into LLP must be registered under India partnership act, 1932. Partnership firms who are not registered under Indian partnership act 1932 cannot convert partnership firm into LLP.
The procedure of converting partnership firm into LLP is as follows –
Step 1 – In the first step, make sure you have DSC (Digital signature certificate) while converting a partnership firm into an LLP. This is the first compulsory requirement to convert partnership firm into an LLP. If you are not having DSC, apply for it as early as possible as the same is required for all the partners.
Step 2 – In the next step, you have to obtain a DPIN (Designated partner identification number). It is also a mandatory requirement for at least 2 partners to proceed further with the conversion process. DPIN is a unique number given to each person holding position of LLP partner or director. It is issued for a lifetime without any renewal.
Step 3 – In the third step, you have to select the name for an LLP and apply for name approval with ministry of corporate affairs (MCA). Selection of name is not an easy task and it should be selected carefully. It should be unique & limited liability partnership must be used at the end of the company’s name.
Step 4 – After getting the name approval from MCA in step-4, you have to file LLP form 17 along with the incorporation application as well as subscribers sheet to convert a partnership firm into LLP.
The following documents mentioned below must be mandatorily attached with LLP form 17 –
1. Copy of acknowledgement of latest income tax return
2. Statement of assets & liabilities of the firm certified by any chartered accountant of India
3. Statement of consent of partners of the firm
4. List of approval of all the secured creditors for converting a partnership firm into LLP.
5. No objection certificate from tax authorities.
6. Approval from any regulatory body/authority.
Step 5 – In the fifth step, LLP form 2 & LLP form 3 is also to be filed along with LLP form 17. LLP form 2 includes incorporation document and subscriber’s statements. The following documents mentioned below must be submitted along with LLP form -2 –
1. Proof of registered office of LLP
2. Approval of regulatory authority (If required)
3. Subscriber’s sheet including consent
4. Details of LLP/company in which person is a director or a partner.LLP form 3 includes LLP agreement. LLP agreement should be attached with form-3 and this form is filed once the partnership firm is converted into LLP.
Step 6 – After successfully filing all the documents along with the prescribed fees, the certificate of conversion will be issued by registrar after verifying all the documents.
At least two members are required for LLP registration.
Any individual/organization can become the partner of LLP including foreigners/NRI’s.
Our procedure is 100% online. You won’t need to be available at our office or show up at any other office for conversion of partnership to a Limited Liability Partnership. A scanned copy of documents can be sent to us via mail, and we will handle the rest.
There is absolutely no other payment. We will send you an invoice that is all-inclusive, with no hidden charges.
Yes, after acquiring DIN/DPIN an NRI or Foreign national can become a designated partner is LLP. However, at least one designated partner in the LLP must be a Resident of India.
The main advantage is that in an LLP, there are fewer formalities after the business has been incorporated. For example, you need not file annual returns etc. unless your income crosses a certain limit. An LLP is preferable if you are offering professional services, like a lawyer or architect. A Private Limited Company is preferred if you want to launch a scalable enterprise.
You will find it hard to raise capital from investors or to attract talent to the business by issuing ESOPs.
An LLP must have at least two partners in order to be registered. The maximum number of partners is unlimited. You can register as a One Person Company if you are the sole proprietor.
Any individual or organisation, including foreigners and non-resident Indians, can become a partner in an LLP. An individual must, however, be over the age of 18 and possess a valid PAN card.
An LLP agreement is made between the partners and the LLP regarding the relationship between the individual partners in the LLP. An LLP agreement usually consists of management policies, the inclusion of new partners, policy-making strategies, and so on.
Yes, you can register your LLP at your residential address. It is perfectly legal to start the company at your home. MCA team typically doesn’t visit your office. You just have to provide your home address proof such as rent agreement or electricity bill.
Yes, as a salaried person you can become a partner in an LLP. But you need to make sure that whether your employment agreement allows for such provisions. In most cases, employers are comfortable with the fact, that their employee is a director in another company.