LLP stands for Limited Liability Partnership. It is a unique form of business organization that combines features of a traditional partnership and a company. The main reason for the evolution of LLP is its simplicity in formation and easy maintenance, while providing owners with limited liability protection. This advantage sets it apart from traditional partnership firms.

Incorporating an LLP offers the benefits of limited liability similar to a private limited company, along with the flexibility of a partnership firm. In an LLP, partners are not personally liable for the unauthorized actions of other partners, protecting them from joint liability arising from the misconduct of another partner. LLPs are commonly preferred by professionals, micro and small businesses that are family-owned or closely-held.

The recent introduction of the Limited Liability Partnership (Second Amendment) Rules, 2022 by the Ministry of Corporate Affairs (MCA) has made the LLP registration procedure even simpler and more transparent. All LLP forms are now web-based, and an LLP can be incorporated with up to 5 designated partners without the need for a Designated Partner Identification Number (DPIN). LLPs will be allotted their Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) along with the Certificate of Incorporation, eliminating the need for separate applications.

The LLP registration process involves several steps, including obtaining a digital signature, applying for an LLP name through RUN-LLP, incorporating the LLP using Form FiLLiP (which includes DIN and PAN/TAN applications), and filing the LLP agreement. The recent LLP (Second Amendment) Rules, 2022 also introduce changes such as the availability of web-based Form 9 for filing the Consent of Partners and the requirement for the Statement of Account and Solvency to be signed by an interim resolution professional on behalf of the LLP.

Government fees for LLP registration vary based on the contribution amount, with costs ranging from Rs. 500/- for contributions not exceeding Rs. 1 lakh to Rs. 5000/- for contributions exceeding Rs. 10 lakh. It’s important to note that there may be additional costs such as DIN application fees, stamp duties, and LLP form filing fees, which can vary depending on the respective state’s requirements.

Every LLP must have at least two designated partners, who must be individuals, with at least one of them being a resident of India. The rights and duties of partners are governed by the LLP agreement, which outlines the terms of the partnership.

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