Limited Liability Partnership (LLP) registration is the preferred option for startups and professionals in India as it provides the best option for flexibility and liability protection. But there are many things that can go wrong on the way to a successful LLP Registration and that can cause unwarranted delays, rejections and even fines.

An LLP brings together the simplicity of a partnership with the separate legal identity of a corporation, which protects the partners' personal assets from debts incurred by the business. In order to take full advantage of the benefits of an LLP, however, an effortless and compliant LLP Registration right from the beginning is paramount. Knowing the common mistakes is the first step in ensuring that you have a strong legal base for your business. Let's look at the most common LLP Registration mistakes, and how you can mitigate them.

Name Rejection

The LLP Registration process has various challenges, and one main hurdle is getting the name of the LLP approved by the Ministry of Corporate Affairs (MCA). A rejection of a name application at the proposed stage can possibly stop the LLP registration process completely.

Common Reasons for Rejection:

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Similarity: The MCA will reject names that are identical or too similar to the name of an existing company, LLP, or an existing trademark. The MCA takes a strict view on names, and their goal is to minimize public confusion.
Restricted Words: The name of the LLP includes words like ‘Bank,’ ‘Exchange,’ or ‘National,’ and does not have the necessary regulatory approvals.
Prohibited Names: The name violates the Emblems and Names (Prevention of Improper Use) Act, 1950, because it implies government support.

How to Avoid It: Before proposing a name, you should conduct a thorough search on the MCA portal and trademark registry. It is also recommended that you prepare a list of 2-3 alternative names for the LLP registration process, as this can save you a substantial amount of time in the registration process if the name is not approved. Avoiding these LLP Registration mistakes at the naming stage is crucial.

Document Issues

Documentation errors are one of the top reasons for rejection during the LLP Registration process. The application must be error-free, including even the smallest mistakes, otherwise, you may be asked to resubmit.

Key Documentation Errors:

Inconsistent Information: Discrepancies in partner information among various documents such as PAN, Aadhaar, and address proofs is a big red flag.
Missing Signatures/Certificates: Not acquiring the Digital Signature Certificate (DSC) and Director Identification Number (DIN) for all the designated partners beforehand would result in application being put on hold.
Improper Submissions: Submission of blurred, unsigned, incomplete documents including missing No Objection Certificate (NOC) for registered office address is also a ground for rejection.

How to Avoid It: Carefully review all documents for consistency before submission. Obtain DSC and DIN of all partners in the very beginning of the LLP Registration. These are some of the most Common LLP Mistakes which can be easily avoided by a simple cross verification.

Non-Compliance

Forming the LLP is just the beginning of the LLP Registration process. There are a number of essential activities you need to take care of after registering the LLP, and most need to be within specified timelines. Overlooking these issues is one of the most serious Common LLP Registration mistake.

Major Compliance Lapses:

LLP Agreement Filing: The LLP Agreement needs to be filed in Form 3 within thirty days of incorporation. If you miss this deadline, you will incur a penalty of ₹100 for each day delay without a maximum penalty.
Annual Filings: LLPs become subject to annual filings and financial statements every year with the Registrar of Companies (ROC). Ignoring this leads to heavy fines and penalties.
Designated Partners: An LLP needs a minimum of two designated partners, with at least one being an Indian resident. Failure to meet this criterion is considered a compliance breach. The issue of a designated partner is key in planning to avoid the LLP Registration mistakes.

How to Avoid It: You need to maintain a compliance calendar to keep track of all timelines. Timely filing and compliance with all statutory obligations is imperative for your LLP to operate effectively going forward. Consider involving professionals to guide you throughout this process to avoid LLP Registration mistakes.

How Lawfinity Prevents Errors

At Lawfinity, we acknowledge that the process of LLP Registration can be overwhelming due to its many intricacies. Our simple and expert process is built around avoiding all the Common LLP Mistakes and making your LLP Registration experience as seamless as possible.

We give you end to end support right from conducting comprehensive name availability search so as to avoid rejection. Our team cross-checks thoroughly every document to remove any discrepancies and to ensure that all requirements are in place before filing like DSC and DIN etc. We don’t just stop at getting you incorporated; we help you with post registration compliance, including when to file the LLP Agreement. By partnering with Lawfinity for your LLP Registration, you can avoid costly LLP Registration mistakes, and focus on what you do best i.e. building your business.