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Transition your sole proprietorship into an LLP and unlock added advantages like limited liability, operational flexibility, and greater credibility.
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The Limited Liability Partnership (LLP) structure, introduced under the LLP Act, 2008, was designed to offer a more flexible and secure business format. By converting a sole proprietorship into an LLP, business owners can benefit from limited liability while enjoying the operational flexibility of a partnership.
LLP combines the benefits of a company and a partnership firm into one hybrid structure. Unlike a proprietorship, it limits personal liability—partners are not accountable for each other’s negligence or misconduct. This makes LLP an ideal option for professionals, micro and small enterprises, and closely-held or family-run businesses seeking scalability with reduced risk.
A Limited Liability Partnership (LLP) is recognized as a separate legal entity, distinct from its partners. Unlike a general partnership firm, an LLP can own assets, enter into contracts, and initiate legal action in its own name—ensuring greater legal and operational independence.
The liability of partners in an LLP is limited to the amount of capital they commit as per the LLP Agreement. Partners are not personally liable for the losses or debts of the LLP, even during its dissolution. Additionally, each partner is protected from being held accountable for the negligence or misconduct of other partners.
An LLP is governed by the terms set out in the LLP Agreement. The partners have the freedom to define how the LLP will operate, including the division of roles, responsibilities, and decision-making powers. This makes LLPs highly flexible, allowing partners to structure and manage the business as they see fit—something not typically possible in other business formats.
Compared to a Private Limited Company, an LLP has fewer compliance obligations. Statutory audits are only required once the LLP crosses a specific threshold in turnover or capital contribution. Additionally, formalities like conducting partner meetings or passing resolutions are more flexible and not mandatory in all situations, making LLP compliance simpler and more relaxed.
Provide Aadhar, Voter ID, Passport, or License for all partners.
Recent passport-sized photo of all partners.
Utility bill of registered office address (electricity/telephone).
Obtain No Objection Certificate from property owner of registered business address.
Provide Rent Agreement of registered office premises, if applicable or available.
If partner is NRI or foreign national, documents must be notarized or apostilled accordingly.
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Primarily builds LLP’s brand and should ideally be a unique coined word.
The second part of the name should indicate the LLP’s business activity.
The LLP’s name must end with “LLP” or “Limited Liability Partnership” as a suffix.
When applying for name reservation, the trade name of the proprietorship can be used as the LLP’s name. The Ministry may approve the same name, given that the proprietorship is being converted into an LLP, unless the name is already taken by another company or LLP. However, final approval of the name is entirely at the discretion of the MCA.
Yes, Foreign Direct Investment (FDI) in LLPs is permitted under the automatic route for sectors approved by the Foreign Investment Promotion Board (FIPB). However, Foreign Institutional Investors (FIIs) and Foreign Venture Capital Investors (FVCIs) are not allowed to invest in LLPs. Additionally, LLPs cannot avail External Commercial Borrowings (ECBs).
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Convert proprietorship to LLP to leverage on added benefits with limited liability