Limited Liability Partnership (LLP) is slowly becoming quite favorable for an e-commerce. LLP is a partnership where the partners enjoy limited liability. In case of bankruptcy, the personal assets of partners are not affected as the company becomes a separate legal entity in front of law.
The following are the features of a LLP:
- Separate legal entity
- Minimum 2 partners required whereas, no limit for maximum partners
- Limited liability
- No minimum capital contribution
LLP enjoys the following advantages:
- Separate legal entity in the eyes of law
- Liability of each partner is limited to the amount of shares
- Low cost of formation
- Easy to form
- Partners are liable only for their own act and not for others
- Less restrictions and compliance
The steps for the registration of a LLP are:
- A Designated Partner Identification Number (DPIN) has to be obtained by filing the eForm DIR-3.
- Obtain DSC
- Apply for name by filing up Form 1 (application for reservation or change of name)
- Filing of Form 2 (Incorporation document and Subscriber’s statement), if required
- After incorporation, agreement needs to be filed within 30 days. It is to be filed in Form 3 (Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein).
Time taken for incorporation is 14-20 working days.
Cost varies from INR 7000-9000 (approx) for basic registration.