Not even a decade in, the Limited Liability Partnership (LLP) has already become a strong competitor to the private limited company. This is because it is the perfect vehicle to run a small business, the kind that dominates India. You can’t raise capital or award ESOPs to employees, but it has greater tax benefits and fewer compliances. This works just fine for web development shops or law firms, for example. The process to form one is also simpler. Here’s what you need to do:
Step 1: Apply for DIN 1
The Designated Partner Identification Number (DPIN), which the two proposed designated partners must apply for, requires the following: passport-sized photograph, a scanned copy of either the telephone bill, driver’s license or previous two months bank statement, soft copy of the PAN card and a completely filled form. If the partner is a non-resident Indian, then a copy of the passport will replace the PAN card. The passport copy and address proof should be notarised by the Indian embassy, a foreign public notary or company secretary in full-time employment.
Step 2: Apply For DSC
With the DPIN, you can apply for the DSC for the two designated partners. The documents you need to submit for this are the same as those you need for DIN 1, along with the e-form.
Step 3: Name Reservations
You need to fill the e-form 1 with www.llp.gov.in for name availability. Along with this, you must provide the main objects of your business and the significance of the name. Go here to see if your name is available. But keep in mind the following rules: a) The first half of your name must be unique, at least in the sector in which you operate. b) There cannot be a trademark by the same name on the IP India website. c) The second half of your name must relate to the business you’re in. d) Abbreviations, adjectives and generic words are rejected, as are the words bank, exchange and stock exchange (unless you have the approval or RBI or SEBI).
Step 4: Document Verification
The documents filed for name reservation are examined, and, if approved, you can file the incorporation documents and subscription statement in e-form 2. If this is approved, you will receive the certificate of incorporation. But you’re still not done. Within 30 days from the receipt of certificate of incorporation, you will need to file the LLP Agreement Form-3. The government will verify this and, if satisfied, approve your LLP Agreement.