What is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership (LLP) is a hybrid business structure that combines the flexibility of a partnership with the limited liability protection of a company. Introduced in India through the LLP Act, 2008, it has become one of the most popular structures for professional services firms, consultancies, and small businesses.
As of 2025, over 2.5 lakh LLPs are registered in India, with the number growing by 15-20% annually.
Key Benefits of LLP
1. Limited Liability
Partners are only liable up to their agreed contribution. Personal assets are protected from business debts - unlike a traditional partnership firm where partners have unlimited liability.
2. Separate Legal Entity
An LLP has its own PAN, bank accounts, and can own property. It can sue and be sued in its own name.
3. No Minimum Capital Requirement
You can start an LLP with any amount of capital contribution. There is no minimum requirement like in some other jurisdictions.
4. Lower Compliance Than Pvt Ltd
No mandatory audit below Rs 40 lakh turnover. Only 2 annual filings (Form 8 and Form 11) compared to 8-10 filings for a Pvt Ltd.
5. Easy to Manage
No requirement for board meetings or AGMs. The LLP agreement governs the management and operations.
6. Tax Efficiency
Partners' remuneration and interest on capital are deductible expenses, reducing the effective tax burden.
LLP Registration Process
Step 1: Obtain DSC
All designated partners need a Class 3 Digital Signature Certificate. Cost: Rs 990 per person.
Step 2: Apply for DPIN
Designated Partner Identification Number (DPIN) is the LLP equivalent of DIN. It can be applied through the FiLLiP form.
Step 3: Name Reservation (RUN-LLP)
Apply for LLP name approval through the MCA portal. Fee: Rs 200. You get 2 name choices per application.
Step 4: File FiLLiP Form
Form for Incorporation of LLP (FiLLiP) includes:
- •LLP details (name, registered office, nature of business)
- •Details of designated partners
- •Capital contribution details
- •Consent of partners
Step 5: Draft LLP Agreement
The LLP Agreement is the most important document. It must be filed within 30 days of incorporation and covers:
- •Rights and duties of partners
- •Profit-sharing ratio
- •Capital contribution
- •Admission and retirement of partners
- •Dispute resolution mechanism
Step 6: Certificate of Incorporation
RoC issues the Certificate of Incorporation with LLPIN (LLP Identification Number).
Documents Required
For Each Partner:
- •PAN Card
- •Aadhaar Card
- •Address Proof
- •Passport-size photograph
- •Proof of residential address
For Registered Office:
- •Rent agreement or ownership proof
- •Utility bill (less than 2 months old)
- •NOC from property owner
LLP Registration Fees
| Component | Cost |
|---|---|
| DSC (per person) | Rs 990 |
| Name Reservation (RUN-LLP) | Rs 200 |
| FiLLiP Filing Fee | Rs 500-5,000 (based on contribution) |
| Stamp Duty on LLP Agreement | Varies by state |
| Professional Fee (Setup India) | From Rs 1,999 |
LLP Annual Compliance
| Form | Description | Due Date | Penalty for Late Filing |
|---|---|---|---|
| Form 8 | Statement of Accounts & Solvency | October 30 | Rs 100/day |
| Form 11 | Annual Return | May 30 | Rs 100/day |
| ITR-5 | Income Tax Return | July 31 (Oct 31 if audit) | Interest + penalty |
| Tax Audit | If turnover > Rs 40 lakh | September 30 | Rs 1.5 lakh penalty |
LLP vs Partnership Firm
| Parameter | LLP | Partnership Firm |
|---|---|---|
| Liability | Limited | Unlimited |
| Legal Entity | Separate | Not separate |
| Registration | Mandatory | Optional |
| Compliance | Form 8 + Form 11 | Minimal |
| Max Partners | No limit | 50 |
| Property Ownership | In LLP name | In partners' name |
| Fundraising | Debt only | Debt only |
When NOT to Choose LLP
- •If you plan to raise equity investment (VCs and angels prefer Pvt Ltd)
- •If you are a single entrepreneur (need minimum 2 partners)
- •If you want to issue ESOPs to employees
- •If you plan to go for an IPO in the future
Conversion Options
- •Partnership to LLP: Straightforward process under Schedule II of LLP Act
- •LLP to Pvt Ltd: Possible under Section 366 of Companies Act, 2013
- •Pvt Ltd to LLP: Possible under LLP Act provisions
Conclusion
LLP is an excellent choice for professional services firms, consultancies, and small businesses that want limited liability without the compliance burden of a Pvt Ltd. With Setup India, LLP registration starts at Rs 1,999 with transparent pricing and dedicated CA support.