1. How many people are required to start a limited liability partnership (LLP)
There should be a minimum of 2 people to start an LLP
2. How much time does it take to set up an LLP?
It takes around 15-20 working days to set up an LLP. The setting process involves obtaining Designated Partner Identification Number (DPIN) and Digital signature for partners, unique name for the firm. Once the name is approved and relevant documents are submitted for incorporation, MCA will issue incorporation certificate. So, if the relevant documents are submitted correctly and if the work load at MCA is moderate, one can get the incorporation even within a week’s time.
3. How much does it cost to set up an LLP?
The cost includes fee, stamp duty and professional fee of a company secretary. Total cost will be around Rs.15000
4. How is LLP different from a partnership firm?
In case of LLP, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
5. How much tax is to be paid by LLP?
LLP is treated on par with traditional partnership firms under Income Tax Act. Tax on profits for LLP is 30.9%. LLP is not subject to dividend distribution tax as compared to company. So, the distribution of profits is tax-free
6. Can foreigners incorporate LLP?
Yes, the LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate an LLP in India provided at least one designated partner is resident of India. However, prior approval of Central Government is to be obtained before registering the LLP by the partners.
Can a charitable entity or other ‘Not for profit’ entities be able to set up an LLP?
No. The essential requirement for setting up an LLP is ‘carrying on a lawful business with a view to profit’.
7. Whether a company can be a partner of an LLP?
Yes. A company can be a partner of an LLP.
8. Will a firm or a company be able to convert themselves into LLP?
The LLP Act contains enabling provisions pursuant to which a firm (set up under Indian Partnership Act, 1932) and private company or unlisted public company (incorporated under Companies Act) would be able to convert themselves into LLPs.
9. Can an LLP be converted into a partnership firm or company?
There is no provision for converting LLP into a partnership. However, LLP can be converted into a Company under section 366 of Companies Act, 2013.