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Limited Liability Partnership Registration in India: A Detailed Guide - Overview
A Partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and goals set out in the Partnership Deed. Two or more parties get together with a formal agreement(known as Partnership Deed) to own and manage the business.Partnership registration is relatively easy and is prevalent among small and medium sized businesses in the unorganized sectors. Liabilities of partners are unlimited, even the personal properties of the partner shall be used to settle the liabilities of the firm. A partnership firm registration is not obligatory in India except that in Maharashtra. Partnership Firm does not have a legal entity separate and apart from its partners. Therefore earnings of the partnership is taxed as personal earnings of the partners.
- A member partner is not entitled to receive remuneration for participating in the conduct of the firm's business.
- For a partner entitled to interest on the capital he subscribes, such interests are payable only out of profits.
- To exercise his rights emanating from a contract against a partner or the partnership firm, a partner can sue any other partner or the partnership firm.
- Partnership registration is inexpensive as compared to LLP.
Benefits to register Partnership Firm
After the online registration of a One Person Company in India, there are the following benefits that can be enjoyed:
Flexibility: Company incorporation as a partnership firm is quite popular as its easy to manage and scale up.
Selection of a Firm’s Name: You and your partners can choose any name for your firm. However, you need to be vigilant so that your chosen name is unique enough so as not to infringe on the copyright of any other person or any trademark.
Free from Statutory Audits: As a partnership firm, it is not necessary for you to file audited financial statements with the registrar of firms. This leaves your partnership firm free from getting your books of accounts from being audited.
Sharing of the responsibility: The responsibility is shared by all partners as per the agreement. Other than the profit and the loss, the duties & authorities are also divided between the different partners.
Partnership Deed: A Partnership Firm runs on the basis of a written agreement between partners which is called as Partnership Deed where all the roles and responsibilities of Partners are clearly mentioned and registered with registrar of firms.
No Audit required: Generally Audit is not required for a Partnership Firm unless it crosses certain threshold.
Checklist for Registering a Company in India
A minimum of two partners
No minimum share capital needed
Documents Required of Directors
- Passport size photograph
- Statement /Bank Passbook with the latest transaction
- Self-Attested Copy of the Pan Card
- Self Attested copy of Aadhaar Card / Passport / Driving License / Voter Identity Card
- Electricity Bill/Telephone Bill /Gas Bill/ Water Bill -To be signed by the of the Owner of Premises.
|Form of Business||PRIVATE LIMITED COMPANY||ONE PERSON COMPANY||LLP||PARTNERSHIP FIRM||PROPRIETORSHIP FIRM|
|Recommended For||Startups & Growing Companies||Sole Promoters||Professional Services Companies||Small Businesses Firms||Small Traders, Agents & Manufactures|
|Prevailing laws||Companies Act||Companies Act||LLP Act||Partnership Act||NA|
|Charter Documents||MOA & AOA||MOA & AOA||LLP Agreement||Partnership Deed||NA|
|Limit of Members||2-200||1||2-Unlimited||2-20||NA|
|Separate legal identity||Yes||Yes||Yes||NO||NO|
|Annual Statutory Compliances||High||High||Low||Low||Low|
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Simplified Performa for Incorporating Company Electronically, also known as SPICe, was introduced in the year 2016 for the purpose of incorporation of the companies. Under the Ease of Doing Business (EODB) initiative, the MCA released the new form SPICe+ to further ease the company incorporation process. The new SPICe+ form encompasses more features than the earlier SPICe form. Name approval is integrated as part of the SPICe+ form. The AGILE form has been converted to AGILE Pro to provide GSTIN / ESIC / EPFO / Bank account as well along with company incorporation. Apart from that, even after affixing DSC in the form, information can be modified in the SPICe+ form.
After the introduction of the SPICe+ form, the name approval has been integrated with SPICe+. Part-A of SPICe+ is for name approval. Therefore, from 15th February 2020, the RUN form can only be used for a change of name.
Company Limited by Shares: The liability of the shareholders is limited only to the amount that is unpaid on the shares held by them. Company Limited by Guarantee: A company having no share capital where the liability of the shareholders is limited up to the amount undertaken to be contributed by them in the event of liquidation of the company.
Yes. private limited companies are eligible for attracting foreign direct investments in compliance with the relevant laws and regulations.
DIN, also known as Director Identification Number, is an identification number of a person intending or has become a director in a company. DPIN, also known as Designated Partner Identification Number, is an identification number for a designated partner in LLP. It is similar to DIN in the case of companies. DIN and DPIN are issued by the Ministry of Corporate Affairs.
Yes. Even a foreign national can become a director in a private limited company.
As per the Companies Act, 2013, only an individual natural person can become a director in a company. Therefore, neither a company, firm, or association can become a director in any company. This is to ensure the fixation of duties and responsibilities that would be difficult in the case of companies and firms becoming directors.
The private limited company registration cost depends upon various factors like authorized capital, number of directors, etc. Initiate your Pvt. Ltd. Company Registration with eAuditor Office as your partner in corporate compliance! Reach out to us for any professional assistance.