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A partnership Firm is among the key types of business organization. A partnership is formed when two or more persons mutually agree to come together and start a business on mutual consent.
The Indian Partnership Act, of 1932 governs and regulates partnership firms in India. It defines it as an association of two or more persons to carry on as co-owners of a business for profit motive.
In a Limited Liability Partnership (LLP), partners are only liable for debts up to their capital contributions, protecting personal assets. One partner is not accountable for another's actions, unlike in traditional partnerships.
An LLP Is an artificial person created by law. It is governed under the LLP Act, 2008. Thus, it creates a separate legal identity of itself, from its partners, and provides immunity to the owner’s personal property or assets in case of bankruptcy.
Annual Compliance of an LLP is less as compared to a Private Limited Company. Thus, the annual charges of LLP Compliances are less than others, making it a cost-effective type of formation.
The Formation and Closure Process of an LLP is simple and cost-effective, as compared to a Private Limited Company. Thus, it is very effective for those start-ups who are unsure about the future of their business, as it leads to minimum cash outflow.
PAN Card of each partner
Address Proof of each partner(Aadhar card, Voter id, Passport, DL)
Latest Passport Size Photograph of each partner
Latest Electricity Bill, Water Bill, and Gas bill of the office premises
NOC from owner/Rent Agreement
1
Persons who will be acting as a Partner or Designated Partner of the proposed company, need to apply for DSC. It is issued by the government-affirmed offices. DSC is required to sign and validate all the documents, as the entire process of registration is online.
2
Proposed name availability needs to be preliminary checked on MCA, and then Name Reservation needs to be filed under “RUN -LLP”. ROC will check the name availability on different parameters and then will issue the name approval letter.
3
Form FiLLip needs to be filed for incorporation of LLP along with the DIN allotment and PAN TAN Application. This contains the Address of the Proposed LLP, Business Activities to be carried out, Details of Partners, and the Contribution by Partners.
4
Once Form FiLLip is approved; a Certificate of Incorporation is issued by the Ministry of Corporate Affairs along with the PAN and TAN Card of the LLP.
5
An LLP Agreement is to be filed in Form No 3 within 30 days of the date of Incorporation. LLP Agreement needs to be printed on Stamp Paper, of the State where the registered office of the LLP is located.
6
Persons who will be acting as a Partner or Designated Partner of the proposed company, need to apply for DSC. It is issued by the government-affirmed offices. DSC is required to sign and validate all the documents, as the entire process of registration is online.
COMPARISON WITH OTHER FORMATS TO CHOOSE THE BEST SUITABLE FOR YOUR BUSINESS
LLP vs. Private Limited Company vs. Partnership Firm vs. OPC Company vs. Proprietorship Firm
Proprietorship Firm | Partnership Firm | Limited Liability Partnership | Private Limited Company | One Person Company | ||
---|---|---|---|---|---|---|
Governed by | Not Governed by any specific act | Indian Partnership Act | LLP Act, 2008 | Companies Act, 2013 | Companies Act, 2013 | |
Recommended | Sole Promoter | Small Business | Small Business | Start-ups and growing business | Sole Promoter | |
Registration | NA | Optional | Mandatory | Mandatory | Mandatory | |
Members Liability | Unlimited | Unlimited | Limited | Limited | Limited | |
Separate Legal Entity | No | No | Yes | Yes | Yes | |
Number of Members | Only 1 | 2 – 50 | 2 – Unlimited | 2 – 200 | Only 1 | |
Transferability | Non-Transferable | Non-Transferable | Transferable, if ROF registered | Transferable | Transferable | |
Compliance | Low | Low | Moderate | High | High | |
Statutory Audit | No | No | Based on Turnover | Applicable | Applicable | |
Taxability | Low | High | High | Moderate | Moderate |
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