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COMPANY/LLP INCORPORATION

  • Jul 29

ABOUT COMPANY INCORPORATION

Company is a legal entity construed by a class of individuals to conduct business and upon being legally incorporated has a distinct identity separate from its promoters, members, directors, workforce, etc. There are several forms of companies which can be incorporated subject to the needs of the business organization viz. One Person Company, Private Company, Public Company, Non-Profit Organization (NPO) (Section 8 Company), Small Company, Producer Company, Nidhi Company or as may be notified by the Central Government on this behalf.

Private Company: Private Company refers to a company having a minimum paid-up share capital as may be prescribed and which by its articles

  1. Restricts the right to transfer its shares
  2. Limits the number of its members to two hundred
  3. Prohibits any invitation to the public to subscribe for any securities of the company

MANDATORY REQUIREMENTS

  1. Applicant to ensure that the name chosen for its entity
    1. Does not resemble the name of any existing company or
    2. Is not undesirable or
    3. Does not have such words or expressions that require prior approval of Central Government
    4. Co-relates with the objects to be undertaken by the company
  2. The company shall ensure the following
    1. Own a registered office, within thirty days of its incorporation and at all times thereafter, where all the communications and notices addressed to it can be received and acknowledged
    2. Each of the subscribers/directors, to have Digital Signature Certificate , in case the number of subscribers/ directors to Memorandum of Association and Article of Associations is up to twenty

BELOW DOCUMENTS AFTER THE INCORPORATION.

  • Incorporation
  • DIN allotment
  • Mandatory issue of Permanent Account Number
  • Mandatory issue of Tax Collection Account Number
  • Mandatory issue of Employees’ Provident Fund Organisation registration
  • Mandatory issue of Employee’s State Insurance Corporation registration (Not applicable in non-implemented area)
  • Mandatory issue of Profession Tax Registration (as may be applicable)
  • Mandatory Opening of Bank Account for the Company and
  • Allotment of Goods and Services Tax Identification Number (if so applied for)
  • Shops and Establishment registration (as may be applicable)

ABOUT LIMITED LIABILITY PARTNERSHIP (LLP) INCORPORATION

Limited Liability Partnership or LLP has become very popular for the past few years. Let’s learn more about it. We shall focus on the elements required and the process and steps involved in the LLP registration process in this article. The guidelines we are going to discuss below comes from the Limited Liability Partnership Act (LLP Act), 2008.

Elements Essential for the Incorporation of an LLP

In India, the given elements are necessary for LLP incorporation according to the LLP Act, 2008:

  • To electronically submit the completed document of Incorporation in the format prescribed with the Registrar.
  •  To have 2 partners at least- individuals or body corporate
  • To have an office registered in India for to and fro communications.
  • To have appointed two individuals at least as designated partners and one of them has to be a resident of India. The partners stay responsible for getting everything done as deemed necessary by the LLP.
  • To have the Ministry of Corporate Affairs (MCA) allotted DPIN or Designated Partner Identification Number for each of the designated partners.
  • To have an agreement between the designated partners or between the designated partners and the LLP. In the absence of such an agreement, the provisions under Schedule 1 of the LLP Act, 2008 would apply.
  • To have a unique name for the LLP. It should not be a name that is already being used by another LLP or a Company or a Partnership firm. The name needs to be distinct.

Process for the Incorporation of an LLP 

The following components are needed in the LLP incorporation procedure.

  • Deciding partners and designated partners.
  • Obtaining the Digital Signature Certificates (DSCs) and the Digital Partner Identification Numbers (DPINs).
  • Checking the availability and registering a unique name of the LLP. The applicant is allowed to indicate up to 6 choices of names.
  • Drafting the agreement for the LLP.
  • Filing of the necessary documents electronically.
  • Applying for and issuing the Certificate of Incorporation along with the Limited Liability Partnership Identification Number (LLPIN). 

An LLP agreement constitutes the following:

  • Name of the Limited Liability Partnership.
  • Names and respective addresses of the partners and the designated partners.
  • The forms of the contributions and the respective interests on the contributions.
  • The ratio of profits to be shared amongst the partners.
  • The remunerations of the respective partners.
  • The rights and duties of the respective partners.
  • The business proposed.
  • The rules for the governance of the LLP.

Steps for the Incorporation of an LLP

  1. Reserving the name for the LLP: The applicant first files the e-Form 1 to check the availability of the name and then register the name of the LLP. Once the name gets approved by the Ministry, it is reserved for the applicant for a duration of 90 days. If the LLP fails to be incorporated within the given frame of time, they let go of the reservation and make it available for other applicants.
  2. Incorporating a new LLP: After the reservation of the name for the LLP, the applicant has to file e-Form 2 for the incorporation of the LLP. It carries all the details of the LLP proposed, plus all the details of the partners and the designated partners.
  3. The partners and the designated partners have to give their consent to act in the respective decided roles.
  4. Filing of the LLP Agreement has to be done with the Registrar in e-Form 3 within 30 days from the incorporation of the LLP. Execution of the LLP Agreement is mandatory as per Section 23 of the LLP Act, 2008.

The LLP Incorporation process is complete after obtaining the approval of the LLP Agreement

 

 

 

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Frequently Ask Questions (FAQ's)

A: The full form of IEC is Importer- Exporter Code. IEC is regarded as a key business identification number that is compulsory for the purpose of export from India as well for the purpose of import to India. Without having an IEC no export as well as import must be made by any person. The documents required in case of Partnership are as follows: • a) Partnership Firm Pan Card. • b) Partnership Deed. • c) Aadhar Card and Pan Card of all partners. • d) Cancel Cheque of Partnership Firm.
A: When you register a Private Limited Company, the promoters of your Company need to decide on the amount of authorised capital and the share value they will get in return if they invest in your Company. Authorised Capital or Registered Capital is the maximum ceiling limit of the capital up to which a Company can issue shares and collect money from its shareholders. The authorised capital can also be enhanced by passing a resolution at a meeting of the shareholders. The minimum Authorised Capital of a Private Limited Company is Rs. 1 lakh and the Ministry of Corporate Affairs charges an amount of Rs 5,000/- as fee for allotting this minimum authorised capital.
A: A partnership is an association of two or more persons who carry on as co-owners and share profits. There can be a contribution of money (capital investment in the business project) or services in return for a share of the profits.
A: There are three types of partnerships -- general partnerships, joint ventures, and limited partnerships. In a general partnership, the partners equally divide management responsibilities, as well as profits. Joint ventures are the same as general partnerships except that the partnership only exists for a specified period of time or for a specific project. Limited partnerships consist of partners who maintain an active role in the management of the business, and those who just invest money and have a very limited role in management. These limited partners are essentially passive investors whose liability is limited to their initial investment. Limited partnerships have more formal requirements than the other two types of partnerships.
A: Partnership deed. Partnership firm PAN card. Address Proof of the partnership firm. Identity proofs of all the partners. Partnership registration certificate (if partnership has been registered) Any registration document issued by central or state government (normally GST certificate is submitted) Authorization latter / e-mail id / mobile.no / HSN code . etc
A: LLP Registration is the registration of an entity that provides the advantages of a Company and the flexibility of a Partnership firm in a Single organization.
A: An LLP is supposed to file 1. LLP Annual return by Filing Form 11. 2. Final Statement of Account and Solvency 3. Income Tax Return.
A: An LLP cannot raise funds from the public in any form. In an LLP only partners can contribute their capital and the liability of the Partners is limited to the extent of their contribution.
A: Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. Three elements are need to form a partnership: There must two or more persons. The agreement must be to share the profits of the business. All partners together, or anyone, on behalf of the others, must carry on the business.
A: Name of the partnership firm. Place of business of the firm. Names of any other places where the firm carries on business. Date of joining each partner. Name and permanent address of the partners. Duration of the firm. The Deed signed by all partners. Current Bank Account For opening a current bank account, a firm needs to submit Partnership firm PAN card Address Proof of the partnership firm Partnership registration certificate (if partnership has been registered) Any registration document issued by central or state government (normally GST certificate is submitted) Copy of electricity bill, telephone bill or water bill (not more than 3 months old) Authorisation letter on the letterhead of the firm authorising a partner as authorised signatory for the bank account.
A: It is not mandatory to register a partnership firm as per the provisions of the Partnership Act, 1932. However, it is better to register a partnership firm. If the firm is not registered it cannot avail any legal benefits provided to the firm under the Partnership Act, 1932.
A: The registered firm or its partners can file a case against third party on breach of a contract. If the firm is unregistered, the partnership firm cannot file a case against the third party but the third party can file a case against the firm. Also in the case of a dispute with a third party, the unregistered firm or any of its partners cannot claim a set off.
A: The registration of the Partnership Firm in India can take up to approx 10 working days. However, the time taken to issue the Certificate of registration may vary as per the regulations of the concerned state. The registration of Partnership Firm is subject to Government processing time which varies for each State.
A: A partnership firm can be registered at the time of its formation or even subsequently at any stage. However, it is advisable to get the firm registered as soon as it starts its business for availing the rights that can be enjoyed only by a registered firm.
A: To benefit from input tax credits, any partnership firm that purchases, sells, or offers services must register under the Goods and Services Tax (GST). Under Goods And Services Tax (GST), businesses whose turnover exceeds the threshold limit of Rs.40 lakh or Rs.20 lakh or Rs.10 lakh as the case may be, must register as a normal taxable person. It is called GST registration. For certain businesses, registration under GST is mandatory.
A: Every taxpayer whose annual revenue exceeds 40 lakhs must register for GST. If you wish to offer goods and services at occasions or exhibitions where you don't need a permanent home for your business, you must register for GST. Based on a 90-day projection of sales, such a merchant is required to pay GST.
A: A partnership is an association of two or more persons who carry on as co-owners and share profits. There can be a contribution of money (capital investment in the business project) or services in return for a share of the profits.
A: The proprietor needs to obtain the Registration Certificate under the Shops and Establishment Act of the state in which the business is located. The sole proprietorship should also register for GST if the business turnover exceeds Rs. 20 lakh. Is registration of proprietorship firm compulsory?
A: Every taxpayer whose annual revenue exceeds 40 lakhs must register for GST. If you wish to offer goods and services at occasions or exhibitions where you don't need a permanent home for your business, you must register for GST.
A: Name of the proprietorship firm. Place of business of the firm. Names of any other places where the firm carries on business. Date of joining each . Name and permanent address of the proprietorship firm Duration of the firm. The Deed signed by all proprietorship. Current Bank Account For opening a current bank account, a firm needs to submit proprietorship firm PAN card Address Proof of the proprietorship firm proprietorship registration certificate (if proprietorship has been registered) Any registration document issued by central or state government (normally GST certificate is submitted) Copy of electricity bill, telephone bill or water bill (not more than 3 months old) Authorisation letter on the letterhead of the firm authorising a partner as authorised signatory for the bank account.
A: The owner of the sole proprietorship will have to pay income tax on all income listed on the personal tax return. This includes income from business activities at the applicable individual tax rate for the year.
A: Under the Income Tax Act, all proprietors below 60 must file an Income tax return if the total income exceeds Rs. 3 Lakhs. For proprietors over 60 years who must file income below 80, income tax filing is mandatory if the total income exceeds Rs. Three lakhs. Proprietors over 80 years and above must file the proprietorship tax returns if the income exceeds Rs. 5 lakhs. If the proprietor files an income tax return before the deadline, losses in the business would be allowed to be carried forward. The deduction under sections 10A, 10B, 80-IA, 80-IAB, 80-IB, and 80-IC cannot be permitted unless the proprietorship income tax return has been filed on or before the due date.