The most crucial choice when deciding to start a business is picking the correct legal structure. For many entrepreneurs and small business owners, the LLP has come across as one of the viable options for them. These are legal structures combining the advantages of a partnership with a corporation through limited liability, flexible with legal protection, and perfect for startups and small businesses or professional service providers.

At Legal Dev, we guide businesses through stress-free LLP registration, adherence, transparency, and other hassle-free processes. We will, in the blog, discuss the definition of LLP, its merits, and how Legal Dev can make LLP registration online easily available.

What is an LLP?

An LLP, or Limited Liability Partnership, is a hybrid business structure that can offer benefits from a partnership as well as from a corporation. It was brought forward to provide a structure under which partners could collaborate yet limit their liabilities

Unlike a regular partnership, an LLP ensures the protection of the personal assets of the partners in case of business debts or lawsuits.

This structure is governed by the Limited Liability Partnership Act, 2008 in India and has become popular because of its flexibility in operation and liability protection.

Benefits of LLP Formation

1. Limited Liability: Partners’ liability is limited to their contribution towards the LLP. Personal assets are safe, making it safer than a traditional partnership.
2. Separate Legal Identity: An LLP is recognized as a separate legal entity from its partners, so it can own assets, enter into contracts, and sue or be sued.
3. Operational Flexibility: LLPs have fewer requirements for compliance compared to companies, and this allows the business to focus on expansion.
4. Tax Benefits: LLPs have a flat rate of tax; there is no tax levied on dividend distribution and are thus more tax efficient.
5. No Minimum Capital: LLPs do not require any minimum capital; that is, unlike private companies, they have no set capital.
6. Perpetual Succession: The life of an LLP goes on irrespective of changes in the partners, hence ensuring continuity.

LLP Registration Procedure

The basic requirements to register an LLP are :

1. Minimum Partners: An LLP needs a minimum of two partners. The number of partners has no upper limit.
2. Designated Partners: At least two of the partners need to be designated partners, which are those responsible for complying with regulatory requirements. The designated partners need to possess a DPIN.
3. Digital Signature Certificate (DSC): The DSC needs to be obtained by all the designated partners to digitally sign any documents at the time of registration.
4. Registered Office: This is the official address through which all communications regarding the LLP are to be done.