Business Advisory & Consulting
Services
File Your Income Tax Returns with Confidence - Expert Help for Timely and Accurate Filings. Let’s Connect!
Partnership and LLP Registration
Overview
Choosing the right business structure is a crucial first step when launching your venture. Partnership Firms and Limited Liability Partnerships (LLPs) are two popular choices among small and medium-sized enterprises due to their ease of formation, shared responsibility, and flexible operations.
While traditional partnerships are governed by the Indian Partnership Act, 1932, LLPs are a modern alternative governed by the Limited Liability Partnership Act, 2008, combining the benefits of both partnership and corporate structures.
Comparison: Partnership vs. LLP
| Feature | Partnership Firm | LLP |
|---|---|---|
|
Governing Law |
Indian Partnership Act, 1932 |
LLP Act, 2008 |
|
Legal Identity |
No separate legal entity |
Separate legal entity |
|
Liability |
Unlimited |
Limited to contribution |
|
Registration |
Optional |
Mandatory |
|
Annual Compliance |
Minimal |
Higher (ROC filing mandatory) |
|
Conversion |
Cannot be converted into LLP without legal process |
Can convert to private limited company |
|
Ideal For |
Small businesses, family-owned ventures |
Startups, professionals, joint ventures
|
Partnership Firm Registration
Eligibility & Requirements
Minimum: 2 partners
Maximum: 20 partners
Partnership Deed must include: profit-sharing ratio, duties, duration, etc.
Taxation
Taxed as a separate entity under Income Tax Act
30% flat tax on firm’s income (plus cess/surcharge as applicable)
Post-Incorporation Compliances
PAN & TAN registration
GST registration (if applicable)
Bank account in firm’s name
Income tax return filing
LLP Registration
LLPs are favored by professionals and startups due to limited liability, scalability, and lesser compliance burden than private companies.
Eligibility & Requirements
Minimum: 2 Designated Partners (at least 1 Indian resident)
Digital Signature Certificate (DSC) and Director Identification Number (DIN) are mandatory
LLP Agreement
Must clearly outline profit sharing, partner duties, dispute resolution, admission or removal of partners, and dissolution process.
Post-Incorporation Compliances
Filing of Form 11 (Annual Return) and Form 8 (Statement of Accounts & Solvency)
Income Tax Return (ITR-5)
Audit required if turnover exceeds ₹40 lakhs or contribution exceeds ₹25 lakhs
Event-based forms like Form 4 (changes in partners), Form 3 (agreement amendment)
Benefits of Registering a Partnership or LLP
- Legal recognition and protection
- Access to government tenders, loans, and contracts
- Ease of business continuity
- Professional credibility with clients and vendors
- Structured dispute resolution and exit mechanism
Frequently Asked Questions
A Private Limited Company restricts the transfer of shares and limits the number of shareholders to 200. It cannot raise funds from the public. A Public Limited Company, on the other hand, can offer shares to the general public and must have at least seven shareholders with no upper limit. Public companies must comply with stricter regulations under the Companies Act, 2013.
A Limited Liability Partnership (LLP) is a hybrid business structure combining features of a partnership and a company. It provides limited liability to its partners, meaning their personal assets are not at risk for business debts. Unlike a company, an LLP does not require compliance with extensive regulations.
The key difference is liability protection. In a partnership firm, partners are personally liable for business debts, whereas in an LLP, liability is limited to the extent of the partners’ contributions. Additionally, LLPs are governed by the LLP Act, 2008, while partnerships are regulated under the Indian Partnership Act, 1932.
A company has shareholders and directors, while an LLP has partners managing operations.
A society is a non-profit organization registered under the Societies Registration Act, 1860, for charitable, cultural, religious, or educational purposes.
A trust is a legal arrangement where assets are held by a trustee for the benefit of beneficiaries. It is governed by the Indian Trusts Act, 1882.
Request a Callback
Need expert advice? Leave your details and we’ll call you back shortly!