Basic requirements to register a private limited company in India

1) Minimum two shareholders are required to incorporate a Private Limited Company in India. The shareholders can either be an Foreign individual or a foreign company.

2) Minimum of two directors are required out of whom one should be a resident in India. Please note that the requirement is resident of India (Not Indian National), which means a foreign national who is an Indian resident is eligible. Indian Resident means any person who has stayed in India for more than 182 days in the previous calendar year.

3) Foreign Investment should be allowed in that Industry.

4) After the company is set up and bank account is opened. The foreign investment which comes into India needs to be reported to the Reserve Bank of India (RBI).

Documents Required to register a private limited Company:

If you want to register a wholly owned subsidiary, then we need the holding company’s documents

  • Foreign Company Documents:
    •  The registration certificate of the foreign company
    •  Memorandum and Articles of the foreign company
    •  A board resolution Authorizing the foreign company to invest in India
  • Foreign Director
    •  Passport
    •  Utility Bill
    •  Drivers License
    •  Passport Size photographs for directors (4 each)
  • Indian Resident Director:
    •  Pan copy is mandatory for the Indian Resident
    •  ID Proof – Driver’s License/Passport/Voter’s ID
    •  Address Proof – Bank Statement/Telephone bill
  • Registered Office documents:
    •  Address Proof of place of business (Electricity Bill or Water Bill with full address)
    •  No Objection Letter from property owner of the office

FDI Reporting to Reserve Bank of India:

Every time a foreign company or a foreign individual invests money into India by setting up a business or investing in an existing business, FDI reporting to Foreign Exchange management department or RBI is mandatory.

The foreign company or foreign national investing in the Indian company must transfer the funds in foreign currency to the Indian Bank account. While doing the bank transfer, you will have to select the purpose code as “Investment” or “Equity investment” or anything similar.

Once the funds reach the Indian bank, the bank will issue a Foreign Inward Remittance Certificate (FIRC). With which we can do FC-GPR filing with RBI.

Advance reporting needs to be filed within 30 days from the date of receipt of the funds. and FC-GPR filing has to be done within 60 days from the date of receipt of funds.

Post Incorporation Licenses:

After the company is registered, it may have to get certain licenses deepening on the nature and size of business. Here are the list of licenses which is required if a company is registered in Bangalore, Karnataka

1) Karnataka Shops and commercial establishment – All companies registered must get this license from the department of labour.

2) Professional Tax enrolment – All companies registered must get this license from the department of professional tax.

3) Employee Professional Tax – (required only when salary payable is more than Rs 15,000 per month to employees)

4) Import Export License – (Required if you are importing or exporting)

5) GST registration – (Required if Company is into export of goods or service, turnover is more than Rs 20 lakhs per year)

Advantages of registering an LLP

Limited Liability Partnership (LLP) is gaining popularity with its numerous benefits it gives to the entrepreneur. LLP is a business entity which combines the limited liability of a company and the flexibility of a partnership.
There are multiple factors an entrepreneur should consider before choosing the type of business one plans to register. The size and nature of business, fund raising, scale etc should be considered before choosing the type of business entity. Here are some of the reasons why you should register your business as a private limited company.

Below are some of the benefits of LLP:

  •  There is no minimum capital requirement.
  •  In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence
  •  The cost of formation of an LLP is lower than other business entities such as private limited company or public limited company.
  •  LLP is a separate legal entity distinct from the partners. LLP can enter into agreements, contracts and it can own property in its name.
  •  LLP is easy to establish, manage & run. The LLP agreement can be customized to suit the requirement of the promoters provided the provisions contained in the LLP agreement is in compliance with the Limited Liability Partnership Act 2008.
  •  The maximum number of partners in a partnership firm is 10 in case of banking business and 20 in all other types of business. However, in an LLP, there are no restrictions on maximum number of partners.
  •  The regulatory compliance for an LLP is relatively less as compared to limited companies. LLPs do not have to hold board meetings, annual general meetings and minutes prepared unless otherwise specified in the LLP agreement.
  •  The partners have limited liability. The partner’s personal assets are not exposed except in case of fraud.
  •  Companies registered under The Companies Act, 2013 has to appoint statutory auditor in the first board meeting on the company. However, LLPs do not have to appoint auditors unless the turn over exceeds Rs. 40 Lacs or capital contribution exceeds Rs. 25 Lacs per annum.
  •  The LLP is free to adopt cash or mercantile basis of accounting with the condition that the method accounting should be regularly followed.
  •  For tax purposes, the LLP is treated as a partnership firm.

Why should you start a private limited company?

There are multiple factors an entrepreneur should consider before choosing the type of business one plans to register. The size and nature of the business, fund raising, scale etc should be considered before choosing the type of business entity. Here are some of the reasons why you should register your business as a private limited company.

Limited Liability

One of the main advantages of starting a private limited company is limited liability. Limited liability means limited exposure to financial risk by investors of a company. Limited liability means the shareholders liability in the company is limited to the capital amount invested in the company.

For example, if Sam invested Rs 100,000 to start a private limited company. The liability is his investment of Rs 100,000. In other words, his can potential loss cannot be beyond Rs 100,000. He won’t be liable for any liability beyond this initial Rs 100,000.

Business Continuity

Private companies enjoy perpetual succession. What does perpetual succession mean? Shareholders may come and go, but the company still continues to be in existence. The company is unaffected by the death of any of its shareholders or the transfer of its shares to another person.

For example, in a partnership firm, a change in the membership leads to dissolution of the existing partnership whereas in a private limited company, one shareholder may transfer his shares to another, but the company still continues to operate.

Fund Raising

Financial institutions such as banks, venture capital funds, private equity funds lend their resources more willingly to private limited companies that to other forms of business organizations.

Banks are more likely to lend to limited companies because they can use the assets of the company as security for the loan. Venture capital firms invest in a private limited company in exchange of equity shares; this cannot be achieved in a partnership firm.

Transfer and Exits

Limited companies are easier to sell as compared to partnership firms. Ownership is represented by equity or preference shares and these can be easily sold without affecting the activities of the company.

Salaries to directors

There is no maximum limit on the salary being paid to directors; whereas there is a ceiling limit on the salary paid to partners of a partnership firm as per Income Tax Act, 1961.

Why should you start a Limited Liability Partnership?

Listed below are some of the benefits of Limited Liability Partnership entities. However an entrepreneur should choose the entity based on his or her requirements and decide which suits them best in the long run.

Minimum Capital

To incorporate a private limited company, the shareholders need to invest a minimum of Rs 1 lac into the company. This is not applicable for an LLP. An LLP can be incorporated with a capital of Rs 1 or above.

Limited Liability

One of the main advantages of starting a private limited company is limited liability. Limited liability means limited exposure to financial risk by investors of a company. Limited liability means the shareholders liability in the company is limited to the capital amount invested in the company.

For example, if Sam invested Rs 50,000 to start a private limited company. The liability is his investment of Rs 100,000. In other words, his can potential loss cannot be beyond Rs 50,000. He won’t be liable for any liability beyond this initial Rs 50,000.

Another important feature of an LLP is that the act of one partner does not affect the other partner. For example of one partner borrowed some money in the name of the LLP without the knowledge of the other partner, the other partners cannot be held liable.

Transfer and Exits

A partner of an LLP can resign and assign his profit sharing to another person and exit the LLP. Exit formalities can be completed by way of executing a simple supplementary agreement.

Legal Compliance

Limited companies need to hold board meeting 4 times a year, at least once in every quarter. It also needs to hold annual general meeting and maintain minutes for such meetings. An LLP does not have to adhere to such compliance unless and otherwise specified in the LLP Agreement.

Income Tax

LLPs do not have Dividend Distribution Tax (DDT) whereas Companies are liable to pay DDT @ 16.609 % (inclusive of surcharge and education cess) on dividends paid to the shareholders.
Both LLP and companies are taxed at 30% plus education cess and higher education cess.

Audit

LLP has to appoint and get its accounts audited only if the LLP’s turnover exceeds Rs.40 Lacs or the capital contribution is more than Rs 25 Lacs any financial year.
But there are other factors an entrepreneur should consider such a size and nature of business, fund raising, scale etc before choosing the type of business entity.

How to Register One Person Company in India

What is OPC?

One Person Company (OPC) a separate legal entity with just one member. Unlike a private limited company which requires minimum 2 shareholders and 2 directors, an OPC can be formed with only one shareholder (there is a nominee director, but with no power until the original director is incapable of entering into contract).

OPC is registered under the Companies Act 2013 with the Ministry of Corporate Affairs. Do not get confused with a sole proprietorship. Sole Proprietorship is not the same as One Person Company.

One Person Company Vs Proprietorship Concern

One Person CompanySole Proprietorship
Separate Legal entityNot a Separate Legal Entity
Limited LiabilityUnlimited liability
Perpetual successionNo perpetual succession
Registration requiredRegistration not required
Financing depends on the credit record of the OPCFinancing depends on the credit record of the owner
Repayment of Loan is not the sole responsibility of the OPCRepayment of Loan is the sole responsibility of the of the owner

Entrepreneurs who register as an OPC can run the business without worrying too much about litigations and liabilities getting attached to the personal assets. One Person Company has a separate legal identity from its shareholders i.e., the company and the shareholders are two different entities for all purposes.

For example1, if Sam invested Rs 100,000 to start a One Person Company. The liability is his investment of Rs 100,000. In other words, his potential loss cannot be beyond Rs 100,000.

On the other hand proprietorship does not have a separate legal identity from its members.

The existence of One Person Company is not dependent upon its members and hence, it has a perpetual succession i.e., death of a member does not affect the existence of the company.

For example2, in a partnership firm, a change in the membership leads to dissolution of the existing partnership whereas in a private limited company, one shareholder may transfer his shares to another, but the company still continues to operate.

Other the other hand, sole proprietorship is an entity whose existence depends on the life of its members and death or any other contingency may lead to the dissolution of such an entity.

Salient Features of OPC (One Person Company)

  •  Only One Shareholder: To incorporate an OPC, it is important that the person registering the company is an Indian citizen and a resident in India. Being a resident in India here means that the person registering the company must have stayed in India for at least 182 days (counting from the immediate calendar), or must have stayed for 60 days or more during that particular financial year and has lived in India for 365 days or more during 4 preceding years (counting from the relevant financial year).
  •  Shareholder’s Nominee: It is important for the shareholder to nominate another person who shall in case of initial shareholder’s death or insufficiency to handle the business, take charge of the business and become the shareholder. Also, the initial shareholder must keep in mind that the nominee too must be a citizen and resident of India.
  •  Director: The company must comprise of at least one Director. The shareholder can also become the sole Director. The maximum number of Directors a company can have is 15.

Procedure to Register a One Person Company

  •  Obtaining DSC – DSC application need to be filed along with ID and address proof duly attested by bank manager, gazetteer officer or post master.
  •  Obtaining DIN – It’s a unique number which is allotted to the Director of a company by the Ministry of Corporate Affairs (MCA).
  •  Name Approval – A minimum of one and maximum of six proposed name can be submitted to the MCA for name approval.
  •  MOA & AOA – MOA is a legal documentation which defines activity of the company. AOA is the rule book of company operations.
  •  Company Incorporation – After submitting the documentation the Ministry of Corporate Affairs will issue a certificate of incorporation.
  •  Application for PAN & TAN – Once the Ministry of Corporate Affairs issue the company incorporation certificate, we will apply for the TAN & PAN.

Benefits of a One Person Company

Separate Legal Entity

  •  An OPC being a recognized as a corporate entity with equity shares, you can raise capital from others like venture capital, financial institutions etc., You will have to convert into a Private limited at this time. OPC need no hold general meetings every year.

Dual Relationship:

  •  A One-Person Company needs to have minimum of one director. It can have directors up to a maximum of 15 which can also be increased by passing a special resolution as in case of any other company.

Limited Liability

  •  Limited Liability, the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited.

Conversion into a private limited

  •  If the average turnover in the last 3 financial years is more than Rs. 2 crores or if the capital is more than Rs 50 lakhs, then the OPC must be converted into a private limited. (Mandatory conversion)
  •  If you plan to add another shareholder in the OPC, it can be done only after 2 years has elapsed from the date of incorporation. (Voluntary Conversion).

We take great pride in working with our clients to resolve their difficult and complicated cases. Our business is understanding your business. We look forward to working with you.

Difference between One Person Company and a sole proprietorship

One Person Company (OPC) a separate legal entity with just one member. Unlike a private limited company which requires minimum 2 shareholders and 2 directors, an OPC can be formed with only one shareholder.

OPC is registered under the Companies Act 2013 with the Ministry of Corporate Affairs. Do not get confused with a sole proprietorship. Sole Proprietorship is not the same as One Person Company.

One Person Company Vs Proprietorship Concern

One Person CompanySole Proprietorship
Separate Legal entityNot a Separate Legal Entity
Limited LiabilityUnlimited liability
Perpetual successionNo perpetual succession
Registration requiredRegistration not required
Financing depends on the credit record of the OPCFinancing depends on the credit record of the owner
Repayment of Loan is not the sole responsibility of the OPCRepayment of Loan is the sole responsibility of the of the owner
Income Tax is 30% of profitsIncome Tax rate is between 5% – 30% depending on the income tax slab the proprietor falls under

Entrepreneurs who register as an OPC can run the business without worrying too much about litigations and liabilities getting attached to the personal assets. One Person Company has a separate legal identity from its shareholders i.e., the company and the shareholders are two different entities for all purposes.

For example, if Sam invested Rs 100,000 to start a One Person Company. The liability is his investment of Rs 100,000. In other words, his potential loss cannot be beyond Rs 100,000.

On the other hand proprietorship does not have a separate legal identity from its members.

The existence of One Person Company is not dependent upon its members and hence, it has a perpetual succession i.e., death of a member does not affect the existence of the company

For example, in a partnership firm, a change in the membership leads to dissolution of the existing partnership whereas in a private limited company, one shareholder may transfer his shares to another, but the company still continues to operate.

Other the other hand, sole proprietorship is an entity whose existence depends on the life of its members and death or any other contingency may lead to the dissolution of such an entity.

You can choose between sole proprietorship and OPC depending on your requirements, type of business and the risk involved in the business.

Salient features of an OPC

  •  The OPC must have only one member at any point of time and may have only one director
  •  The OPC must have a nominee who must be an individual.
  •  Minor shall not become member or nominee of the One Person Company
  •  Both the member and nominee must be a natural person (Cannot be a company). Both should be resident in India”. Resident in India means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

Conversion into a private limited

  • If the average turnover in the last 3 financial years is more than Rs. 2 crores or if the capital is more than Rs 50 lakhs, then the OPC must be converted into a private limited. (Mandatory conversion)
  •  If you plan to add another shareholder in the OPC, it can be done only after 2 years has elapsed from the date of incorporation. (Voluntary Conversion)

Impact of GST on Indian Economy

Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers between states and create a single market. For that to happen the constitution first needs to be amended to remove different layers of governments’ exclusive powers to levy taxes. Once this step is taken, the tax barriers between states, and centre and states will disappear.

MAJOR CHANGES WITH THE INTRODUCTION OF THE GST :

1) Central taxes such as Central Excise duty, Additional Excise duty, Service tax, Additional Custom duty and Special Additional duty as well as state-level taxes such as VAT or sales tax, Central Sales tax, Entertainment tax, Entry tax, Purchase tax, Luxury tax and Octroi will subsume in GST.

2) Provision will be made for removing imposition of entry tax /Octroi across India.

3) Entertainment tax, imposed by states on movie, theatre, etc., will be subsumed in GST, but taxes on entertainment at panchayat, municipality or district level will continue.

4) Stamp duties, typically imposed on legal agreements by states, will continue to be levied.

5) The GST structure would follow the destination principle. Accordingly, imports would be subject to GST, while exports would be zero-rated. In the case of inter-state transactions within India, State tax would apply in the state of destination as opposed to that of origin.

6) The GST regime should have a dual rate structure – low GST rate of approximately 12 per cent on merit goods (e.g. essential commodities), and standard GST rate of approximately 18 per cent on other goods. That apart, it is expected that there may be a higher GST rate of approximately 40 per cent on a few demerit goods (like tobacco, aerated beverages, etc.), lower GST rate of approximately 2 per cent on billions, and exemption from GST on a few select goods.

7) With GST, there will be a significant shift from origin-based taxation to a destination-based tax structure impacting not only the operating business models but also the revenues of the centre/states.

8) Company Registration under GST would replace most indirect taxes currently in place such as:

  • Central Taxes
    •  Central Excise Duty [including additional excise duties, excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955]
    •  Service tax
    •  Additional Customs Duty (CVD)
    •  Special Additional Duty of Customs (SAD)
    •  Central Sales Tax ( levied by the Centre and collected by the States)
    •  Central surcharges and cesses ( relating to supply of goods and services)
  • State Taxes
    •  Value-added tax
    •  Octroi and Entry tax
    •  Purchase tax and Luxury tax
    •  Taxes on lottery, betting and gambling
    •  State cesses and surcharges
    •  Entertainment tax (other than the tax levied by the local bodies)
    •  Central Sales tax ( levied by the Centre and collected by states)

HOW WILL GST HELP INDIAN ECONOMY?

1) GST Registered would help in lesser corruption and with Increased Tax Revenue.

2) Better and improved economy with single taxation will make it easier to identify the tax defaulters.

3) Goods Service Tax Registration will lead to the creation of a unified market, which would facilitate seamless movement of goods across states and reduce the transaction cost of businesses.

4) Tax evasion will be reduced with lower tax and lower cost will result in better investments in manufacturing industry.

5) One tax instead of so many different taxes will make tax compliance’s easier.

6) Increased investments in manufacturing industries and lower cost will result in increased volume of exports.

7) Divination of burden of tax between goods & service industries.

HOW WILL GST HELP CONSUMER?

Today consumers have no idea about the extent of taxes they pay on goods. If you get a bill after buying merchandise which gives the extent of VAT you have paid, it is an understatement of the actual tax you have paid.

Remember, well before merchandise reached the retail outlet, the central government has collected excise duty. The extent of excise duty is not mentioned in the bill.

1) GST includes goods as well as service tax. Presently, service tax is 15% and taxes applicable to manufactured goods as sales tax, CST, VAT, Excise etc. if applicable amount to 24—25%. After implementation of GST, it is recommended that tax will be flat @18%.

2) Price of services may go high. Elimination of multiplicity of taxes and their cascading effects.

3) Price of goods may go down with the less complexity in tax structure.

4) Imported goods may become more expensive as CVD & VAT @12.8%, while after application of GST tax rate will be @18%.

5) Manufacturers can avail tax credit, which will result in reduction of cost, and consumers will get goods at fair price.

The country is eagerly looking out for the roll-out of GST from April 2017, as the regime focuses on creating one single market for all and introduces destination based taxation. GST will attract more investments from foreign investors as the country shall be more industry- friendly. Also, this shall result in generating more employment opportunities. Therefore, it is imperative that the government makes efforts to make the law clear and industry friendly so that the industry and the economy benefits as a whole.

India Startup.in would be always happy to help you with Company Registration services, LLP RegistrationPartnership Registration in Bangalore. Our team consists of lawyers, chartered accountants and company secretaries. We believe experience, service and results are the pillars of success. Be a part of the growing India’s startup ecosystem. Talk to our consultant to know more and get started.


GST Registration Procedure in India

Every person who is liable to registered under GST Act shall apply for registration. The person will register in every such state in which he is so liable. The time limit to register is within thirty days from the date on which he becomes liable. The person can get voluntarily registration thought not liable to registered. All provisions of this Act are applicable as to registered taxable person.

Here, we will talk about GST Company registration procedure in detail like time limit, persons eligible, documents required, background process, structure of registration number, GST registration form etc.

REGISTRATION FOR GST :

  • The vendor and customer GST Company registration numbers will be mandatory for availing or passing the credits, and reporting purpose.
  • Aggregate turnover requirement for GST registration is as below:
Aggregate Turnover
RegionLiability to RegisterLiability for Payment of GST
North East IndiaRs 9 LakhsRs 10 Lakhs
Rest of IndiaRs 19 LakhsRs 20 Lakhs
  • However, certain categories of persons mentioned in Schedule III of MGL are liable to be registered irrespective of this threshold.
  • An agriculturist shall not be considered as a taxable person and shall not be liable to take registration. (As per section 9 (1)).
  • Any person should take a Registration, within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed.
  • Every person who is liable to take a Registration will have to get company registered separately for each of the States where he has a business operation and is liable to pay GST in terms of Sub-section (1) of Section 19 of Model GST Law.
  • GSTN shall migrate all such assesses /dealers to the GSTN network and shall issue GSTIN number and password. They will be asked to submit all requisite documents and information required for registration in a prescribed period of time. Failure to do so will result in cancellation of GSTIN number.
  • Taxpayers would have the option to sign the submitted application using valid digital signatures (if the applicant is required to obtain DSC under any other prevalent law then he will have to submit his registration application using the same). For those who do not have a Digital signature, alternative mechanisms will be provided in the GST Rules on Company Registration.
  • If the information and the uploaded documents are found in order, the State and the Central authorities shall approve the application and communicate the approval to the common portal within three common working days. The portal will then automatically generate the Registration Certificate. In case registration is granted, applicant can download the Company Registration Certificate from the GST common portal.
  •  Structure of Registration Number is as follows:
15 digits in GST no. will denote as below
State CodePANEntity CodeLeft BlankCheck Digit
1-23-12131415

DOCUMENTS REQUIRED FOR GST REGISTRATION:

  • Provisional ID & password, in case of existing applicants (Collect from VAT department or any other concerned authority)
  • Valid E-mail ID and Mobile No. of Applicant.
  • PAN card of the Company/ LLP (PAN is not mandatory for a non-resident taxable person who may be granted registration on the basis of any other document as may be prescribed.)
  • Proof of constitution, in case of LLP or Partnership Firm partnership deed, In case of company certificate of incorporation.
  • AOA & MOA in case of company.
  • Letter of authorization or copy of resolution of Board of Directors to the effect empowering the person to apply for GST.
  • Details and proof of place of business like rent agreement or electricity bill. Photograph, proof of appointment, of Authorized signatory, promoter, partner etc.
  • Cancelled cheque of your bank account showing name of account holder, MICR code, IFSC code and bank branch details.
  • Authorized signatory like List of partners with their identity and address proof in case of partnership firm or List of directors with their identity and address proof in case of company.
  •  Opening page of passbook/statement containing the following information:
    1) Bank account number
    2) Address of branch
    3) Address of account holder
    4) Few transaction details

GST REGISTRATION PROCESS IS AS UNDER FOR NEW APPLICANTS (Source GSTN):
1) The applicant will need to submit his PAN, mobile number and email address in Part-A of Form GST REG–01 on the GSTN portal (www.gst.gov.in) or through Facilitation centre (notified by board or commissioner).

2) The PAN is verified on the GST Portal. Mobile number and E-mail address are verified with a one-time password (OTP). Once the verification is complete, applicant will receive an application reference number on the registered mobile number and via E-mail. An acknowledgement should be issued to the applicant in FORM GST REG-02 electronically.

3) Applicant needs to fill Part- B of Form GST REG-01 and specify the application reference number. Then the form can be submitted after attaching required documents.

4) If additional information is required, Form GST REG-03 will be issued. Applicant needs to respond in Form GST REG-04 with required information within 7 working days from the date of receipt of Form GST REG-03.

5) If you have provided all required information via Form GST REG-01 or Form GST REG-04, the registration certificate in Form GST REG –06 for the principal place of business as well as for every additional place of business will be issued to the applicant.

6) If the person has multiple business verticals within a state he can file a separate application for the registration in Form GST REG-01 for each business verticals.

7) If the details submitted are not satisfactory, the registration application is rejected using Form GST REG-05.The applicant who is required to deduct TDS or collect TCS shall submit an application in Form GST REG – 07 for registration.

8) If he is no longer liable to deduct or collect tax at source then the officer may cancel and communicate the cancel of registration.

  • GST REGISTRATION PROCESS IS AS UNDER FOR EXISTING APPLICANTS (Source GSTN):

    Existing Applicants:

The dealers registered with central or state tax authorities would be migrated to GST by default and allotted Goods and Service Tax Identification Number (GSTIN). Existing applicant’s means any entity registered with any of the following authorities:
1) Central Excise
2) Service Tax
3) VAT
4) Entry/Luxury/Entertainment TaxIndia Startup is the one stop solution for Private Limited Company RegistrationLLP Registration and Partnership firm registration in Bangalore. We will help you take your first step in becoming an entrepreneur. India startup provides legal solutions starting from company registration, accounting, preparing legal documents, business connections, trademark, advisory services, thereby providing end to end solutions in the life cycle of a business venture

Similarities of an Limited liability Partnership and a Private Limited Company

Limited Liability

Both LLP and a Private Limited Companies have limited liability. Liability of partners of an LLP is limited to the extent of the agreed capital contribution in the LLP. Similarly, Liability of shareholders of a private limited company is limited to the extent of shares held.

For example, if Sam invested Rs 100,000 to start a private limited company. Sam’s liability is the investment of Rs 100,000. In other words, the potential loss cannot be beyond Rs 100,000. Sam won’t be liable for any liability beyond this Rs 100,000.

Similarly, in an LLP, the liability of Sam will be to the amount he has invested in the LLP and nothing more. However, the LLP will be liable to the full extent of its assets

Body Corporate
LLP and Private Limited companies are body corporate and a legal entity separate from its partners and shareholders. LLP, similar to a private Limited company, is capable of entering into contracts and holding property in its own name.

Perpetual Succession

It has perpetual succession. Which means the LLP can continue its existence irrespective of changes in partners. Partners may come and go but the LLP continues to be in existence.
The same is the case for a private limited company, shareholders have the option to transfer their shares to another person and exit. However the company still continues to be in existence.