A Partnership firm is a business entity created by persons who have agreed to share profits or loss of the business. Partnerships are a very good choice of business entity for small enterprises wherein two or more persons decides to contribute to a business and share the profits or losses. In India, Partnerships are widely prevalent because of its ease of formation and minimal regulatory compliance. Also, the concept of LLP was introduced only in 2010, whereas the Partnership Act, 1932 has been in existence before the independence of India. Hence, partnership firms are the most prevalent type of business entity wherein a group of people are involved.
As per the LLP Act, 2008, the following elements are necessary to include LLP in India:
The following points need to be ensured for the inclusion of LLP:
Reserve the name of LLP. The applicant files e-Form 1 to ascertain the availability and register the LLP's name. Once the Ministry has approved the name, it is reserved for the applicant for 90 days. Also, if the LLP is not included within that time frame, the reservation is removed and the name is made available to other applicants.
Incorporation of a new LLP. The applicant files an e-Form 2 containing details of the proposed LLP as well as the partners and designated partners.
To act in the said role with the consent of the partners and designated partners.
File the LLP agreement with the registrar within 30 days of incorporating the LLP. Applicant files e-Form 3. As per Section 23 of the LLP Act, 2008, the execution of the LLP agreement is mandatory.
Upon approval of the LLP agreement, the process of incorporation of the LLP is completed.
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