Frequently asked questions.

Here’s what you need to know-answers to most of the Frequently Asked Questions from Entrepreneurs, Professionals or others looking about LLP.

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General Questions

This segment consists of every basic detail one should know while incorporating a Limited Liability Partnership (LLP) firm.

One-Person Company (OPC) is a new type of business entity established as per the latest 2013 amendment of the Company's Act.OPC is managed by a single person who is a director and a shareholder similar to the proprietor. The proprietor can limit personal liability on forming an OPC and can also create a perpetual entity organisation, unlike a proprietor's firm. The company will be termed as 'Company's name (OPC) Private Ltd'.

In simple terms, Limited Liability is to limit your losses (if any) up to what you can afford to lose. The concept of Limited liability is created in order to limit your liabilities.  

Anyone who is willing to start a company individually and would like to run the company as a solo venture can start an OPC.

Proprietorship is an unincorporated entity with Unlimited Liability whereas One Person Company (OPC) is an incorporated entity with Limited Liability. In Proprietorship, the proprietor and business are the same entity. Whereas in One Person Company, both are 2 different legal entity.

PROs AND CONs:

Compliance has a knock-on effect on how your business can grow, improve and thrive. Here are the important compliances that are applicable to an LLP.

The following are some of the benefits:

It is a separate legal entity,

It provides facilities of Limited Liability,

It is verifiable online on MCA and

Only 1 Shareholder, 1 share, 1 director, and 1 nominee are required to start an OPC.

 

It has the same tax slab as a Private Limited Company,

It is suitable only for small businesses,

Director and Nominee should be a resident of India,

Foreign Direct Investment is not allowed,

You cannot open more than one OPC at a time and

The compliances are rigid.

 

 

REQUIREMENTS:

To meet your objective, it is necessary to know the advantages and disadvantages. Here are some pros and cons of an LLP.

A minimum of one director or nominee,

Minimum authorised capital of ₹1Lakh

A registered office address, anywhere in India which can also be your current residential address.

The following are the list of documents that will be attached with the MoA and AoA:

Form INC-3 i.e, consent form from the nominee,

Declaration by a professional Company secretary and any other required.

To open a Bank Account, you need a copy of the Memorandum of Association (MoA), Article of Association (AoA), Permanent Account Number (PAN) Card, and a Certificate of Incorporation.

The following are the documents for the registered office and statutory form:

Proof of Registered Office, latest Utility Bill, NOC from the owner of the premises, and Signed Declaration(s) from the promoters. 

The following are the documents for promoters:

Two photographs of the promoters, PAN Card, Identity proof, and Address proof of each promoter.

The following are the documents required for registering a OPC:

PAN card, Identity and Address Proof, Photography, Business Address proof and Non-Objection Certificate from the owner and Rent Agreement.

REGISTRATION:

A business cannot be commenced by mere investment alone. This segment deals with the requirements to form an LLP.

In order to register an OPC, you will have to:

Check the name availability on the MCA portal.

Create a Login ID and Fill up SPICe+, Agile +, MOA, and AOA.

Subsequently, download the required forms, insert the Digital Signature of all the subscribers and professionals and Upload it on the portal.

Visit MCA portal> Click 'MCA Services'> Click 'Check company name'.

Enter the company's name in the given particular. If a box stating 'entered company/LLP name does not exist' pops up, the Company's name is not registered yet and you can proceed with it. If you scroll down further, you can also check the Trademark for your proposed name.

Login to the MCA Portal. If you are a new user, register.

Login to the MCA portal> Click 'MCA Services'> Click 'SPICe +'> Click 'New application'.

Fill in the form and submit.

In the SPICe+ Form details regarding the capital structure of the Company, Address of the Company, Subscriber's and Director's Details, Nomination, Stamp Duty, PAN and TAN information, Declaration, Declaration and Certification by the professionals, etc will be asked to fill in.

In the SPICe+ Form details regarding the capital structure of the Company, Address of the Company, Subscriber's and Director's Details, Nomination, Stamp Duty, PAN and TAN information, Declaration, Declaration and Certification by the professionals, etc will be asked to fill in.

Memorandum of Association (MoA), Article of Association (AoA), Copy of Utility Bills, Consent of Nominee (Form INC 3), Proof of Identity, and residential address of the subscribers, Proof of Identity and Address of the Applicant and Optional Attachments, if any.

PROCEDURE:

Formation of a business can be a lengthy process. Get answers on the whole process involved in incorporating an LLP.

An LLP can be incorporated following Five simple steps:

  1. Application for DSC (Class 3)

  2. Application for DIN

  3. Application for Name Reservation

  4. Filing of Incorporation Documents

  5. Filing of LLP Agreement

The steps are similar to that of Private Limited Company. To register an OPC one needs to acquire Digital Signature Certificate (DSC) and Director's Identification Number (DIN). It is also required to obtain a Reserve Unique Name (RUN) from the Ministry of Corporate Affairs. Subsequently, file your application of incorporation and application for a certificate of incorporation.

In this process, a company must be incorporated with a unique and new name which should not be the same or similar to an already registered company, LLP, or registered/applied Trademark.

SPICe INC 32 is filed for allotment of Director's Identification Number (DIN) and incorporation of the Company. With the approval of the INC 32 Form, the certificate of incorporation is issued.

RULES:

Formation of a business can be a lengthy process. Get answers on the whole process involved in incorporating an LLP.

The major rules of governing an OPC are as follows:

Directors and Nominee must be Indian Resident,

No requirement of minimum Paid-up Capital,

Directors should at least hold one share of the Company,

After completing 2 years, OPC can be converted into a Public or Private Limited Company,

It is mandatory for an OPC to convert into a Public or Private Limited Company if:

            The paid-up capital of an OPC exceeds ₹50 Lakh or

            The Average Annual Turnover of an OPC exceeds ₹2 Crores.

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