Various business formats have their pros and cons. The partnership pattern has shared risks. On the downside, there is a lack of autonomy. Registered companies are attractive to investors. However, higher expenses need to be incurred. Progressing business trends have found an answer. A combining of both partnership and company format of business. In official terms, it is known as LLP (limited liability partnership). The pros are more than the cons in the case of LLP.  To register an LLP company in India, fewer formalities need incorporation than in other corporate formats. 

Aspects favoring registration of LLP company in India are:

• Easy formation: A minimum of two partners are required to form an LLP company. No fixed educational qualifications are required for the registration. Capital requirements are not fixated per se. 

Any amount decided by the partners would suffice. Non-cash contributions like tangible or intangible, movable or immovable assets are acceptable. The burden of initial capital outlay is absent in the case of LLP. 

• Easy documentation: Very few documents are needed for LLP registration. They are:

1. Utility bill of the registered workplace;
2. Ownership proof of the registered workplace;
3. Partners’ Adhar and PAN copies as identity proofs;
4. A Copy of the utility bill or bank statement serving as address proof;

Precise documentation makes the registration process fast. This enables early commencement of business, saving time. The overall cost of LLP registration is low compared to other business formats such as private incorporation or a public limited company. 

LLP registration online in India is done under the Ministry of Corporate Affairs. Log in to www.llp.gov.in for detailed information. 

• Rare Auditing: In the general scenario, auditing requirements are absent. There are, however, two cases where auditing becomes relevant in LLP. Firstly, when the LLP’s contributions surpass the amount of Rs. 25 Lakhs. Secondly, when the total annual turnover crosses Rs. 40 lakhs. 

Easy auditing norms make LLP a viable business format. The absence of frequent auditing leads to smooth daily operations. Business blocks are less thus productivity is high in the case of LLP. 

• Lesser compliance: The compliance level is way lower in LLP than in traditional corporates. Only two documents demand submission. Namely, the statements of accounts and solvency, with annual returns. In contrast, private companies are required to submit eight to ten documents. 

Various regulatory formalities and due compliances need to be catered to. Easy operations are a natural outcome. Freedom from unnecessary compliances creates a greater scope of output. Therefore, higher profitability is a natural order.

• Shared burden: The basic nature of LLP business includes shared burden. In case of losses or mishaps, each partner’s liability Is limited. This results in peace of mind and higher efficiency for each partner. Stress blocks functionality. The sharing of responsibilities and obligations brings a cooperative sense of operations in business. Growth and prosperity are outcomes of such business practices. 
• Separate legal entity: LLP enjoys the status of a separate legal entity. The assets of the company are fully accessible to all the partners. However, the liabilities of each partner are proportional to his contribution. Misconduct or omission of one partner is not liable by the other partner (s). A normal partnership firm does not enjoy this privilege. 

The benefits of LLP make it a viable form of business arrangement. Contrary to the many upsides, there are just two downsides of the LLP format. 

1. The Tax rate is 30% irrespective of the annual turnover. Exempts in multiple formalities balance this out favorably. 
2. Ownership transferring is a bit complicated. A partner willing to transfer his rights would require a written agreement from all the other partners. Even a single objection can obstruct the transfer. Convincing is the key here!

Formation steps for LLP

1. Obtaining a Digital Signature Certificate (DSC) for all the partners.
2. Checking the name of the LLP title. It can be done by applying in RUN-LLP.
3. Making of an online application. It would require filling out the Form for Incorporation of Limited Liability Partnership (FiLLiP) and due submission.
4. Framing an application for PAN (Permanent Account Number) along with TAN (Tax Deduction Account Number)
5. Drafting and submission of LLP agreement in Form 3 within 30 days of LLP trading incorporation. 

Essential documents for LLP

1. A PAN card is mandatory for an Indian national and a passport for a foreign national.
2. Identity proof such as driver's license, passport, and voter ID. Providing any one of them will suffice. 
3. Address proof such as electricity bill, telephone bill, mobile bill, and bank statement, should not be older than two months, providing any one of the options will suffice. 
4. If you are an Indian national, all of your documents need to be self-attested. In case you are a foreign national, apart from self-attestation, all documents need to be apostilled. 

Registered office requirements:

• Ownership proof such as a sale deed or rent agreement, with signature.
• A utility bill copy can include any one of a telephone bill, electricity bill, or gas bill.

In August 2022 the number of LLPs in India amounted to 252460. The number suggests the growing popularity of the business format. Professionalism in modern entrepreneurship is another strong reason for such numbers. About 84% of the number has less than or equal to 5 lakhs of obligation of contribution. The economic benefits and peace of mind for the partners are giving individuals a reason to venture into LLPs.

Final Thoughts

There are many business types where the involvement and strain level are high and the distribution of liabilities among the partners would bring in a holistic relief. One of the biggest merits of an LLP firm is in case of legal action or overdue debts, the partners ‘assets will still be risk-free. The LLP form of business is very suitable for professions like law, accounting, and various consultancies. Additionally, small and medium-scale industries can also reap the benefits of LLP form of trading. 

If you are a budding entrepreneur with trustworthy potential partners, begin the registration process. The purview of a limited liability partnership is an ever-expansive one. The modern business map has immense width and venturing into a business area of your interest is easier than ever. Shared liabilities tend to bring increased profitability.