A Limited Liability Partnership (LLP) can be a far more effective business vehicle than a traditional partnership. Personal liabilities harm partnerships, while LLPs eliminate the Indian Partnership Act, 1932’s burdensome requirements. There are also tax advantages, no audit obligations below a particular capital threshold, no cap on the number of partners, and no capital contribution requirements. In this blog, there will be a detailed explanation on LLP over Partnership Firm, process to convert Partnership Firm into LLP, Documents needed for conversion, and other related information.
A Limited Liability Partnership (LLP) is one in which some or all of the partners are limited in their liability. As a result, it can display aspects of partnerships and businesses. Each partner in an LLP is not responsible or liable for the misbehavior or carelessness of another partner.
For your business, there are numerous advantages to choosing a Limited Liability Partnership versus a Partnership Firm. The most significant benefit of selecting an LLP instead of a Partnership Firm is that it restricts liability and provides management flexibility. LLPs do not expose their participants to unlimited responsibility, unlike Partnership Firms. A Limited Liability Partnership Firm’s members or partners can also be sued, and they can sue someone because LLP is a separate legal entity due to which it gives rights to sue and to be sued.
Any current Partnership Firm that wants to convert to an LLP must fill out Form 17 (Application and statement for the conversion of a firm to an LLP). Along with Form 2 (Incorporation document and Subscriber’s statement).
A digital signature is not required for the registration of a partnership firm, hence partners in a partnership firm typically do not have one. If the Partners opt to change the Partnership Firm into a Limited Liability Partnership, all of the Partners will need to have digital signatures.
A DIN / DPIN is required for partners in an LLP or directors in a Private Limited Company. A DIN is a one-of-a-kind number assigned to each LLP Partner or Director. A person can use a DIN or DPIN for the rest of his or her life without having to renew it or file any compliance paperwork.
The application form must include the following information
Below are the attachments which need to be provided:
The following information must be included on the application form:
The following attachments must be provided:
Within 30 days of the LLP’s incorporation, the LLP Agreement must be presented in Form LLP-3. It must include the following information
The Partnership Firm is presumed to be dissolved once the LLP is formed and the Partnership Firm is converted. Furthermore, when a partnership is converted to an LLP, all of the assets, firm’s properties, rights, interests, privileges, duties, and liabilities are transferred to the LLP. In other words, the LLP assumes full responsibility for the firm’s operations.
Any permissions, license, or permission granted to the Partnership Firm under any written legislation will not be immediately transferred to the LLP. As a result, new licenses or registrations may be needed. It is vital to evaluate the aspect of converting a partnership into an LLP before beginning the conversion process.
The main advantage of converting a partnership firm into an LLP is that it will protect the personal assets of the partners.
By filing Form 27 (Registration of Particulars by Foreign Limited Liability Partnership (FLLP)), any Foreign LLP can open a business in India. The FLLP’s authorized representative must digitally sign the eForm. There is no obligation for Designated Partners of FLLP to apply for and get a DPIN or DIN, but the authorized representative’s DSC is required.
Once the process is complete, a Partnership Firm will be changed to a Limited Liability Partnership, which means it will be treated as a separate legal entity with the authority to sue other legal entities and be sued by others. It also aids partners in protecting their assets in the event of a firm’s insolvency or other unforeseen situations.
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